BLOG #7

BLOG #7

“More specifically, in the domain of monetary policy it was the role of sterling as the major vehicle currency, held by foreign business, banks, and even central banks, that gave the Bank of England the influence to shape international monetary conditions consistent with the fundamental commitments and dynamics of the regime. And yet, the critical issue in the stability of this regime was not simply some measure of material "supremacy" on the part of Britain, but that "national monetary authorities were inclined to 'follow the market' -and indirectly the Bank of England-rather than to assert in- dependent national objectives of their own.” (Ruggie, pp. 391).

The prevailing character of this quote in other words describes the international monetary order that defines the 21^st century which entails that this system hasn’t changed much. Even though the quote particularly refers to the influence of Britain over economic policy and the implementation of regulations by institutions in order to maintain the supremacy of the Bank of England. This is not different from the takeaways idealized during the Bretton Woods conference, and that later came to fruition under the Bretton Woods system with the creation of the International Monetary Fund and the World Bank. These institutions are placed to serve a purpose and maintain the dominion of a particular economic system and that is capitalist states (specifically the United States and its allies).

This postwar economic model is established as argued by Ruggie through the authority of a regime or the government of a particular nation. What the quote refers to “fundamental commitments and dynamics of the regime” gives an idea of the leading role that the national government of Britain took to maintain a tight grid around their own national interests and those of the international market and that lastly those conditions would consolidate their power. Today, the flow of money/capital, as described in the class lecture, is fundamental for maintenance of trade and the exchange of goods. How is that maintained? National governments must be working diligently to promote those interests but how can be done at the international level, that’s when international organizations like IMF, World Bank and WTO come into place because their regulations permits international monetary conditions to take place and forces other countries to play on the same grounds. Article 1 section 8 of the U.S. Constitution gives Congress the power to create money and regulate it and the implications of that aligns with Ruggie’s interpretation of a national regime and their “material supremacy”.

Really when we look at it closely, the imperial system ceased but not entirely because the tools of those regimes to regulate and maintain the power over monetary policy and the institutions find the current financial system, increasingly and systematically expose an international regime founded on the interests of powerful capitalist nations.