State and the Reemergence of Global Finance (from BW till 1990)

Question 1

BW and the endorsement: what has been assume as the event that created the globalisation of finatial market?

Answer 1

The BW agreements:

• capital controls (permanently, Keynes)

Question 2

What was the economic fremework during the war period?

Answer 2

Two main segments

-1920 
\+ re-estored the pre-1914 liberal international monetary and finance;
\+ balance;
\+ gold standard.
\_\_\_\_> lend by London and NY (shortlived)

-after 1929 
\+ world crisis;
\+ war reparation
\+ payment balance
\_\_\_\_> tha 1931 crisis marked the end of the tradictional liberalism in financial affairs.

Question 3

What was the new in the capital control in 1930?

Answer 3

• the permanence of the control.
• Japan and Germany were the first coutries to use comprhensive finantial controls;
• US “New Deal in international economcs” by Morgenthau: curtail the bank power at home and abroad (following White idea)
• Britain: 1931 stop convertibility gold; loand to overseas borrowers prohibiten.

Question 4

The early proposal of Keynes and White: what were the major points of their argument?

Answer 4

They both support the use of capital controls:
1. power over capital flighting.International movement of capitals could not be allowed to distrupt the policy autonomy of thenew welfare state (debitors with andue balance of payments with bring disequilibrium in the system)

2. in their opinion, liberal financial order was not compatible with a stable exchange rates. Main reason isììto exchange disturbance are speculative capital movement indeed.
3. with some exeption. The coutries with an surplus on their current account could support those in deficit because it help to mantain international equilibrium.
4. they where pro BW, hoped that it would promote quilibrating and productive capital flows by reducing exchange rate instability and restoring confidence in the system.

Question 5

What were the bankers main arguments against Keynes and White?

Answer 5

They wanted compliate freedom:
- control over spaculation: good bye to a lucrative business.

• it gives too protection to GB, economic power that NY bankers wanted to overthrow.
• at the end they agree to accept it but only for the time necessary for restore the system: they fund the permanent control incompatible with a democratic and liberal governament.
• in favour of Williams idea to restore the convertibility beteen the world two main corrency, dollar and pund. He urged the US to remove control to dollar and to extend a large loan to Britan, in order to encourage bankers it to do the same with dollars.

Question 6

What importancy had the opposition of NY bankers to BW?

Answer 6

They tried to reduce barriers to the flow productive capital: it include the obbligation to reduce barrier so limiting the GB right to control capital, particulary by the use of exchange controls.

GB was awere of the weakeness extreme vulnerability of the paund and its payments position.

But the Bank of England supported the White and Kaynes restictive proposal, that win the BW fight against NY bankers.