The bitter winds of financial crisis have once again swept global markets, this time beginning at the core of the system, Wall Street. Whether blame be assigned to private greed, public policy lapses, or both, vast sums of public money and shareholder capital have been wiped out in the otherwise noble cause of preventing systemic breakdown. Vulnerable citizens once more count the costs to the real economy. As massive liquidity has been made available to private financial institutions on exceptionally permissive terms, it has been difficult not to notice the striking contrast with the management of earlier crises based in the emerging markets. When they were in the dock, the emphasis was on the conditionality of the terms of rescue; with Wall Street and the City in trouble, the terms of rescue have been much more open-ended. As growing uncertainty combined with these apparent double standards, the crisis has reopened debate on the global financial architecture, public policy and regulation. Global financial integration and the governance of the global monetary and financial system stand at a crossroads after over thirty years of market-oriented cross-border integration and development preceded and indeed exacerbated a financial crisis on a scale not seen since the 1930s. This ongoing process of integration, regularly punctuated by crises and instability, raises analytical, normative and policy dilemmas which challenge our current understanding of financial and monetary governance. Many scholars argue that higher levels of economic integration require greater degrees of regional and global governance (e.g. Cerny 1995; Zürn 2004). Yet the relationships between economic integration, competitive market dynamics, international political cooperation and potentially new patterns of multilevel governance remain unclear as policy-makers face the difficult task of reform while still coping with the consequences of crisis. While the capacity of the current global financial architecture to cope with monetary and financial challenges is once again in serious doubt, the future direction of reform remains uncertain. To complicate matters further, not only the capacity and efficiency, but also the legitimacy www.cambridge.org
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