The Status Quo Crisis

Abstract

What has been the significance of the 2008 global financial crisis for global financial governance? Because of its severity, many analysts predicted that the crisis experience would be a very transformative one for global financial governance. These expectations were reinforced in 2008–09 by four developments: the creation of the G20 leaders’ forum to manage the crisis, widespread debates about the dollar’s global role, G20 commitments to international regulatory reform, and the creation of the Financial Stability Board (FSB). To date, however, these phenomena have been much less significant than they initially appeared: the G20’s contribution to the management of the crisis ended up being quite limited; the dollar has remained the world’s key currency; the market-friendly character of international financial regulatory standards was not overturned; and the FSB’s capacity to act as a new pillar of global economic governance turned out to be very limited. In these respects, the crisis of 2008 has been—at least so far—much more of a status quo event than a transformative one. Expectations of change were not borne out partly because of the structural power and active policy choices of the country at the center of the crisis: the United States. Status quo outcomes also reflected the unexpected weakness of European governments and conservatism of governments in China and other large emerging market countries. If global financial governance is to be transformed in more substantial ways in the coming years, power and politics among and within these key states will play the central role.

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