Do the International Monetary and Financial Systems Need More Than Short-Term Cosmetic Reforms?

The storm that has rocked our world has opened an interesting debate among economists and policymakers on the need for a new international monetary and financial architecture. In fact, the monetary and financial regime that has been in force since the collapse of Bretton Woods encourages the persistence of unsustainable dynamics that spawn increasingly serious crises, and are unable to impart an acceptable form of macroeconomic discipline to the world’s economy. It became apparent that the global role of a key currency along with the deregulation of financial markets (the neoliberal paradigm) have acted as underlying conditions for the U.S. financial crisis up to the present situation of global financial instability. In this article I point out the inadequacy of the institutional arrangements underlying the international monetary and financial regimes and I outline the relevance to the current debate of Keynes’s original plan, proposed with good reason over seventy years ago, but never came to fruition.