Crisisogenicity of the Global Monetary and Financial System: Fundamental Analysis

Abstract

The world monetary and financial system (WMFS) plays a key role in servicing trade and investment activities and transactions between the subjects of the global economy. In recent decades, the participants of international economic relations are facing increasing problems of access to international liquidity. The purpose of the article is to identify the fundamental reasons for the crisis of the modern WMFS. A hypothesis has been put forward regarding the differences between the US and theUK in terms of approaches to reforming the WMFS. From the standpoint of Keynesian theory, it is shown why the current institutional format of the Jamaican monetary system does not allow bringing the world economy to the trajectory of a balanced, confident and inclusive development. The factors of instability of the WMFS, which were fully manifested as a result of the introduction of restrictive measures of economic activity during the COVID-19 pandemic, are summarized. The main risks of the functioning of the WMFS associated with the significant uncertainty of the global economic recovery caused by the protracted nature of the armed conflict in Ukraine, which increased the growth of inflation and commodity prices, the disruption of global supply chains and the implementation of plans for the decarbonization of the world economy, are systematized. The transition of lea[1]ding central banks from stimulating to contractionary monetary policy could lead to a sharp decline in the value of financial assets. Taking into account the status of the US dollar as the key currency for denominating financial instruments and the system-forming role in the global trade in innovative financial products, the destabilization of the US segment of the global stock market is the second most important risk for the functioning of the WMFS in modern conditions. It is concluded that, at a fundamental level, the crisis potential of the WMFS is due, firstly, to the fragmented nature of its reform, secondly, to the conflict of interests between the goals of short-term profit and long-term stability, and thirdly, the unwillingness of the main subjects of the world economy to follow the principle of symmetry in adjusting payment imbalances.

Keywords

• world monetary and financial system, supranational regulation, global economic governance, international trade asymmetries, exchange rate regime, instability factors, destabilization risks