The redesign of the global financial architecture :forums, institutions, and state power

Abstract

This research examines the internationally coordinated, state-led response to the 2007- 2008 economic and financial crisis. It addresses the construction of ‘alternative narratives’ which encompass a partial revision of the economic paradigm, with a particular emphasis on the role of international financial regulatory authority, its rules and institutionalization. The meta-theoretical theme at the centre of this thesis involves the manner in which severe crisis episodes provoke and also reveal the underlying tension and contestation between ‘market authority’ and ‘state authority’ in relation to the regulation of the world economy, financial system and firms, with the goal of ensuring maximization of long-term systemic stability and crisis prevention. The construction of alternative crisis-driven narratives is in part a reaction to the previous ideological hegemonic domination of laissez faire neo-liberal beliefs as applied to deregulation (i.e., of self-regulation by markets and private sector actors in the financial sector). The thesis identifies and examines a paradigm shift in response to the crisis: a move from the dominance of market authority to the reassertion of state authority over financial markets and actors. It addresses the way in which crisis narratives are constructed in response to such episodes and the policy implications of paradigm shifts when they occur. The thesis empirically examines the elite state-level crisis response and its policy consequences, with particular emphasis on the institutional reforms most important to the construction, post-crisis, of a ‘new global financial architecture’. A principal argument within the thesis is that the severity of the financial crisis precipitated a rapid shift in the policy narrative held to by the central banking epistemic community, which constitutes a paradigm shift, and which led to a series of institutional and policy reforms addressing the application of state power and regulatory authority over global financial markets and firms.