Globalization, Crisis Contagion and the Reform of the International Financial Architecture

Karunaratne, Neil Dias (2002) Globalization, Crisis Contagion and the Reform of the International Financial Architecture. Discussion Paper No 300, School of Economics, The University of Queensland.

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Author Karunaratne, Neil Dias
Title Globalization, Crisis Contagion and the Reform of the International Financial Architecture
School, Department or Centre School of Economics
Institution The University of Queensland
Report Number Discussion Paper No 300
Publication date 2002-01-01
Start page 1
End page 20
Total pages 20
Publisher The University of Queensland
Language eng
Subject 340206 International Economics and International Finance
Abstract/Summary The process of globalization has integrated financial markets and cross-border capital flows. This has resulted in the hyper mobility of capital and increased the vulnerability of nations to speculative attacks on their currencies. Capital flows deliver benefits in a first-best world. However, in a second-best world capital controls can reduce the welfare losses due to information asymmetry and other distortions. The speed and sequencing of capital account liberalization are critical to minimize the exposure of an economy to currency crises. Various types of currency crises and resulting contagion and its regional nature have been reviewed. Crisis contagion poses a systemic threat to the stability of the global financial system. Therefore the reform of the international financial architecture in order to minimize the occurrence of crises and crises contagion is matter of utmost importance. The role of the key players in the arena of global capital flows and the proposals for redesigning the international financial architecture are critically reviewed.
Keyword globalization
financial integration
speculative attacks
crisis contagion
convertibility of the capital account
reform of the international financial architecture
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Additional Notes ISSN 1033-4661

Document type: Department Technical Report
Collection: Discussion Papers (School of Economics)
 
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