Introduction -- Regime complexity and main argument -- Dramatis institutiones -- Euro crisis in a nutshell -- Greece 2010 -- The Troika, Ireland, and Portugal -- Spain and Italy -- United States and International Monetary Fund -- New facilities and institutions -- Greece 2012 and Cyprus 2013 -- Greece, the crisis continues -- Lessons and conclusions
ABSTRACTThe theory of regime complexity offers a useful lens through which to analyse the increasing density of international institutions and the patterns of conflict and cooperation among them. Scholarship on crisis and development finance would benefit from more fully employing this approach to explain the emergence of overlapping institutions and offer recommendations for designing regime complexes. The theory advanced here emphasizes the strategies of key states to use institutional overlap to limit agency 'drift' away from their preferences. Prioritizing control often comes at the cost of conflict among the institutions, however, and can thus impede the achievement of financial stability and development goals. The regime complexity approach is distinct from the rational design of institutions, institutional experimentalism and theoretical realism. Drawing on lessons from the euro crisis, this article offers informed conjectures on financial arrangements in the regions of Latin America and East Asia and their interaction with global multilateral institutions, such as the International Monetary Fund.
AbstractRegions of the world have developed an increasing number of financial arrangements to underpin the stability of capital markets and combat crises. But these arrangements vie for influence over international finance with the International Monetary Fund (IMF), as has been dramatically illustrated during the euro crisis, and threatens to fragment global financial governance. This article reviews the regional financial arrangements (RFAs) and their relationships to the IMF, examines the sources of conflict between these institutions, draws lessons from the euro crisis for institutional cooperation, and proposes a set of guidelines and principles to avoid fragmentation of financial governance in the future.
In: C. Randall Henning, "The ECB as a Strategic Actor: Central Banking in a Politically Fragmented Monetary Union," in Europe's Crises: Economic and Political Challenges of the Monetary Union, edited by James A. Caporaso and Martin Rhodes (New York: Oxford University Press, Forthcoming).
This paper examines the extent to which economic crises facilitate the development of more effective regional institutions and whether such institutions can shield regions from crises. It compares six regional economic crises over the last four decades and the institution building—or decay—that followed. The analysis concludes that five conditions are especially important in generating a constructive regional response: (i) a significant degree of regional economic interdependence; (ii) an independent secretariat or intergovernmental body charged with cooperation; (iii) webs of interlocking economic agreements; and, as elements of the multilateral context, (iv) conflict with the relevant international organization (such as the International Monetary Fund [IMF]); and (v) the support of the United States. The paper then reviews three episodes of crises in Europe, concluding that the Economic and Monetary Union (EMU) has deflected balance of payments and currency crises but not crises of other types, such as sovereign debt crises. Asian regionalism would be well served by heads of government taking the lead and delegating tasks to intergovernmental networks and secretariats, central banks and finance ministries retaining substantial collective autonomy in their fields of responsibility, and the use of concentric circles to accommodate countries with different levels of commitment to regionalism.
AbstractScholarship on European integration has debated the external character of the monetary union extensively. This article examines the establishment of the institutional arrangements for foreign exchange intervention and the policy‐making surrounding the market operations of autumn 2000 – the only case to date of euro area intervention in currency markets. Drawing on elite interviews of officials in European institutions and international organizations, among other sources, it specifies the division of labour between the European Central Bank, Eurogroup and other European actors. The article concludes that (1) the inter‐institutional understanding within the euro area gives substantial but not complete latitude to the ECB, (2) the understanding is susceptible to renegotiation over time and (3) economic divergence within the euro area could threaten the ability of the monetary union to act coherently externally.