The New International Financial Architecture: Imposed Leadership and 'Emerging Markets'

Abstract

The Asian bust of 1997 caught the international financial community by surprise. It also opened the floodgates to a torrent of criticism about the ability of financial liberalization to create sustained prosperity. The United States government launched an impassioned defence of capital mobility by blaming the 'emerging markets'. In the larger framework of the G7 (Group of Seven) the US sought to strengthen the existing rules of the game through the creation of the so-called New International Financial Architecture (NIFA) at the Cologne summit in 1999. The chief significance of the NIFA lies in its attempt to incorporate what are called 'systematically important' emerging market economies into a carefully-structured international policy-making environment, so as to ensure that they adopt the rules and standards of the West, by integrating these countries more closely with the International Monetary Fund (IMF) and the World Bank.