Back to The Drawing Board: The International Financial Architecture Exercise

This essay tackles the issue of the reform to the international financial regime by tracing the evolution of the policy consensus in the academic and practitioner community on the measures deemed necessary to ensure global financial stability. Although it is too early to draw firm conclusions from the current debate, this essay nonetheless argues that the crisis has challenged the intellectual assumptions on which the governance of the international financial system was built after the Asian crisis. While the post-Asia intellectual and policy consensus emphasized the importance of markets in crisis prevention and management, after the sub-prime crisis it seems that the faith in the role of markets has been seriously undermined in favor of an approach favoring market regulation. In sum, the moralizing turn of the late 1990s (Best 2003), which recognized the ultimate value of the markets in ensuring international financial stability, has not gone unscathed in the aftermath of the recent crisis, opening a window of opportunity for the evolution of the principles underlying the reform efforts