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Reforming World Finance: Geopolitical Challenges - Essay Example

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Reforming World Finance: Geopolitical Challenges

Changes in the structure of the global financial systems are not visible as of yet, partly because bankers and policy makers have delayed reform implementation in various places, whether intentionally or unintentionally, as well as resistance to these reforms. The current challenges are of an economic and geopolitical nature. Recent international affairs have seen the convergence of two trends. One has been the rebalancing of the configuration of geopolitical power while the second has seen a strong re-emergence of states in global finance. This convergence will most likely result in sustained turbulence, in global politics and uncertainties, in international financial systems. This is expected to be a major challenge in reformation of global financial systems. The Anglo-Saxon system seems to have reached its failing point with the current downturn in the global financial systems blamed, primarily on this failure. The state’s role is making a comeback as globalization is rolled back. President Obama makes this obvious in the United States as he moves the country towards a bigger and more activist government. The quasi-nationalization of automotive and banking industries and the reform pending for its financial system makes this clear (Altman, 2009: p4). There is work underway for the development of tools for intervention in institutions that are in distress while also being compliant to an international scale. Global financial system reformations have also seen activity by non-banking finance institutions that operate outside the perimeter, i.e. shadow banking. Finally, there is implementation of market reform derivatives in order to achieve over the counter implementation of global financial systems, as well as implementation of effective banking supervision on a global scale. However, these are hindered by changing geopolitical scenarios. Rethinking Global Financial Governance Reform The recent financial crisis has cast a cloud over the financial market’s deregulated model while also prompting increased attention to evidence that counter the globalization argument claims. The manner in which this feeds into operating procedures for development of organizations and economist opinions remains to be seen (Wade, 2009: p162). Most of the evidence, which is applied to support the argument on globalization is significantly weak with its acceptance being testimony to the strength that the confrmations bias carries in neoliberal ideology. The between-country distribution of income has tended towards inequality in the era of globalization by any plausible measures. There is domination of convergence by divergence, particularly when th`ere is exclusion of the Chinese Peoples Republic. This domination of divergence over convergence hajs far reaching consequences for rivalry between states, global governance, and the rise of leaders with messianic tendencies. However, even considering the weakening of the globalization consensus among world economists and interventions of governments in financial matters, it is increasingly clear that increased constraints on financial actors’ behavior will only be applicable when the crisis ends (Wade, 2009: p163). The financial interests among the different major nations still remain strong with the free market ideology being too ingrained in the western economic psyche for it to become permanently displaced in their financial policy paradigm. The form of neoliberalism identified in the world financial system order ...Show more


Reforming World Finance: Geopolitical Challenges Name: Institution: REFORMING WORLD FINANCE: GEOPOLITICAL CHALLENGES Introduction Bankers and policy makers, of late, have been keen to make clear commitments to lift debilitating uncertainties that have weighed down on the global financial systems…
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