Promoting global financial governance reform from the perspective of financial imbalances

Abstract

After World War II, the international economic and financial order provided beneficial public goods for global financial and economic development. However, at the same time, its governance structure still had a series of flaws and did not fully achieve its purpose, which was to promote the economy and stabilize global finance. In particular, the current deteriorating geopolitical situation, increasing financial fragility, and the intensifying trend of weaponizing currency have highlighted the importance of advancing the reform of global financial governance. There are already various ideas and measures for the reform of global financial governance. This study hopes to integrate these ideas and measures to analyze global financial governance with a new, academically reliable analytical framework. This study analyzes global financial governance from the new perspective of global financial imbalance or global liquidity imbalance and proposes governance directions and plans. A recent article published by Martin Wolf, chief commentator of the New York Times in the UK, elaborated and criticized seven wrong views of globalists. The first misconception is to “focus only on trade” and not pay attention to finance, especially the impact of cross-border capital flows on the economy. Therefore, this study is committed to reversing the one-sided interpretation of global imbalances, pointing out that global financial imbalances are the root cause of global financial fragility, and accurately and organically combining promoting globalization and reforming global financial governance. This study is mainly divided into three parts. The first part is about the basic concepts and framework of financial imbalances; the second part is about the negative impact of global financial imbalances on global financial governance; finally, reducing global financial imbalances and promoting global financial governance reform.