- The political economy of global financial governance: the costs of Basle II for poor countries
- World Economy and Finance working paper series
- WEF 0015
- Number of pages
- Birkbeck College, University of London [etc.]
- Document type
- Working paper
- Faculty of Social and Behavioural Sciences (FMG)
- Amsterdam Institute for Social Science Research (AISSR)
The 1990s financial crises triggered many changes to the design of the international financial system, the so-called international financial architecture. While much affected, developing countries have had very little influence on the changes, which the formulation of the new Basle capital accord (B-II) illustrates. The article shows that B-II has largely been formulated to serve the interests of powerful market players, with developing economies being left out. For developing countries, B-II can make domestic financing more costly and raise the costs of and reduce the access to external financing. Importantly, B-II can exacerbate fluctuations in the supply of external financing, an unfortunate outcome, given that developing countries already suffer from volatility.
- November 2006
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