A Bretton Woods moment? The 2007-2008 crisis and the future of global finance

Abstract

The 2007–2008 global financial crisis encouraged speculation about the prospects for a ‘Bretton Woods moment’ in which the global financial system would be radically redesigned. Many of those hoping for this outcome have since become disillusioned with the limited nature of the international financial reform agenda. But the success and innovation of the Bretton Woods conference was made possible by unique political conditions that are not present today, notably concentrated power in the state system; a transnational expert consensus; and wartime conditions. Moreover, a close reading of history reveals that the Bretton Woods system did not emerge from a single moment but rather from a much more extended historical process. If a new international financial system is being born today, it will be a slower and more incremental development process that can be divided into four phases: a legitimacy crisis; an interregnum; a constitutive phase; and an implementation phase. Viewed from this perspective, post‐crisis developments look more significant. The crisis of 2007–2008 has already intensified twin legitimacy crises relating to international financial policy and leadership. It has also generated an international reform initiative that has been unusual for its speed and internationally coordinated nature. Many of the details of this reform initiative remain unresolved and its content and breadth are hotly contested in various ways. We thus find ourselves in more of an interregnum than a constitutive phase. It remains unclear how quickly, if at all, the latter might emerge and in what form.

Varieties of Economic Crisis, Varieties of Ideational Change: How and Why Financial Regulation and Macroeconomic Policy Differ

“…Partly because of the historical experience of the great depression of the 1930s and the stagflation of the 1970s, much political economy scholarship associates episodes of financial and economic crises with far reaching ideational change (Blyth, 2002, Helleiner, 2010, Hall, 1993, Hay, 1996, Gamble, 2009. One important contribution draws attention to a process of 'persuasive struggle' between elites and mass publics that crises ignite, as agents compete for the right to define the nature of that crisis and how to respond by forwarding interpretations and arguments drawn from particular intellectual frames (Widamier, Seabrooke, 2007, Blyth, 2002).…”

Information and Protection Policy in the Context of Consumer Advocacy Solutions in the Polish Life Insurance Market

“…When analyzing trends in the fundamentals of financial markets regulation, it should be pointed out that in the 1980s, an old paradigm called the Washington Consensus 4 , based on the belief in the absolute rationality of financial markets, which may be subject to short-lived turbulence, but their proper functioning only required good access to information. Consequently, this consensus was based on the belief that this system was safe thanks to private risk management at the level of individual financial institutions, and the guarantees of the quality of this management were to be verified solely by public financial supervisory systems without external relations.…”

The Changing Architecture of the Safety Net in Insurance Worldwide : Post Crisis Developments

“…The whole of this "Washington consensus", supported by the IMF and surrounding institutions' recommendations and policies, was based on efficient market orthodoxy. It has dominated the financial regulatory domain over the last 25 years or so and has fallen apart as an effect of the last global financial crisis [Helleiner 2010]. Its essence relied on unconditional faith in the efficiency and rationality of the financial markets.…”