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9 - Taming the Phoenix? Monetary Governance after the Crisis

Published online by Cambridge University Press:  05 June 2012

Benjamin J. Cohen
Affiliation:
University of California
Gregory W. Noble
Affiliation:
Australian National University, Canberra
John Ravenhill
Affiliation:
University of Edinburgh
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Summary

Ideas, knowledge, art, hospitality, travel – these are the things which should of their nature be international. But let goods be homespun whenever it is reasonably and conveniently possible; and, above all, let finance be primarily national.

John Maynard Keynes

Few observers doubt that the financial crisis that struck Asia in 1997–98 was a watershed event for the global monetary system. For years the tide had been running one way – toward ever closer integration of national financial and currency markets. Politically, governments were increasingly thrown on the defensive by the rapid growth of international capital mobility. As I wrote a few years ago: ‘Like a phoenix risen from the ashes, global finance [has taken] flight and soared to new heights of power and influence in the affairs of nations’ (Cohen 1996: 268). The only question, it seemed, was how much the traditional monetary authority of sovereign states had, as a result, been compromised. ‘The phoenix has risen. Does it also rule the roost?’ (Cohen 1996: 270).

Then came the fall of the Thai baht and all the contagion – the ‘bahtulism’ – that followed. For many, these events served to affirm the new power of markets to constrain policy. The phoenix did indeed rule the roost. Governments had no choice but to live with new limits on their authority. But for others, choice was precisely the issue.

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Publisher: Cambridge University Press
Print publication year: 2000

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