Analysing the Logic of International Monetary Cooperation in Group-Twenty (G20) Summits
In the aftermath of the global economic crisis, much attention was given to the necessity for reforms. In contrast to the Bretton Woods era, the world economy has developed in a much more ad hoc and unplanned way, which from an institutional point of view involves high transaction costs, systemic uncertainty and coordination challenges. The key question we address is whether informal institutions like the Group of Twenty states, (G20), are likely to provide genuine mechanisms for the resolution of inadequacies in the provision of global public goods as well as instruments to face systemic crises. The main argument is that the G20 does not give expression to more explicitly political considerations that inevitably surround regulatory issues and for this reason it is not, (in its current form), a highly useful framework within which to examine the dynamics of international economic policy cooperation. The study uses the methodological tools of institutional theory, concentrating on the inefficiency of G20 to create new rules in the international financial system. The latter consists of a set of multilateral agreements, principles, norms, shared understandings and interconnected international groupings which shape transnational economic transactions. It is evident that the G20 targets the network qualities of current global financial governance and is not capable in implementing structural reforms in global economic decision-making. The paper is organised in the following way. First, it provides an overview of the academic literature on the logic of monetary cooperation. Second, it explores the pillars of G20’s cooperation and its contribution in economic actors learning and adjustment process. Finally, the research turns to policy recommendations underlining the need for restructuring global economic policy and systemising the provision of global public economic goods.