The Mechanisms for Creating a Crisis-Resistant World Financial Architecture

Abstract

Today, there is a clear need to create a new world financial architecture. In this regard, the key task of the leading countries is to reform the mechanisms for regulating world financial markets and supervising the operations of their participants in order to counter crisis shocks. Therefore, the aim of the article is to identify mechanisms for creating a crisis-resistant world financial architecture (WFA) and to analyze strategic approaches to increasing the stability of the global financial system in the face of modern economic and political challenges. In the course of writing the article, economic and statistical methods of analysis, description, measurement, comparison and observation were used. In the process of the study, general theoretical methods of scientific knowledge were also applied: synthesis, deduction, and induction. The study carried out a retrospective analysis of the world financial crises in order to allocate their main features; identify the most effective strategies for restoring positive trends and the effectiveness of anti-crisis policy under different conditions. An analysis of the current state of the WFA has been carried out and the main crisis processes of today have been defined. In order to develop a new strategy for ensuring a crisis-resistant system, a systematization and analysis of existing modern mechanisms for the prevention of financial crises has been carried out. As a result, the following are allocated: the monetary path; regulatory (infrastructural) approach; the use of a new world reserve currency instead of the US dollar; introduction of a regional currency with the possibility of using different underlying assets and transition to the currencies of individual countries. The results of the study were the identification of priority strategic steps and the development of recommendations for achieving the sustainability of the world financial architecture: compliance with the principles of counter-cyclical fiscal management; prudence in the implementation of monetary policy; the need to strengthen regulatory and supervisory control; timely detection of imbalances arising in financial markets; clear risk management and proper international cooperation. Prospects for further research in this direction can be: study of the impact of regional initiatives on the world financial architecture and the possibility of their use to reduce the vulnerability of the world economy to financial crises; development of innovative financial instruments and their importance for the WFA.

Keywords

• world financial architecture
• crisis resistance
• mechanisms
• approaches
• reforms.