The Unassuming Economist

From a paper by Pierre-Hugues Verdier:

“The return of great power competition is transforming international economic law as trade and investment patterns fragment along geopolitical lines and longstanding legal regimes come under stress. The implications of the “return of geopolitics” for international financial governance, however, remain largely unexplored. This article argues that geopolitical competition generates fundamental and pervasive challenges for that regime. As states weaponize financial infrastructure, adopt security-based restrictions on capital flows, and attempt to direct funds away from their adversaries towards allies and strategic industries, they strain the regime’s foundational norms, principles, and procedures: institutional informality, multilateralism, nondiscrimination, and expert regulation. These challenges to the IF regime threaten to undermine cooperation to protect global financial stability and address other common policy concerns raised by financial globalization, such as market integrity, investor and customer protection, crime control, and protecting competition. The regime’s weakening or fragmentation could also impede effective management of future financial crises.”