Summary of Chapter 2: Forging Financial Governance

This chapter covers the period from the middle of the nineteenth to the middle of the twentieth century.  The world's financial system underwent dramatic changes:  greater state authority, financial institutions more internationally active.  Stronger national governance enabled more globalized behaviour.  And the state of great power relations contributed to the ability of states to cooperate in strengthening of the international dimension of governance.  In the 1920s came the first genuine international governance infrastructure (eg. the Dawes Plan, gold standard).  Finance is impossible without determined political support, especially in times of economic and political breakdown.  There must be a balance between the national and the international or global dimensions of financial governance.  When domestic economic and political systems break down, a global system cannot be maintained.  Likewise, if an adequate international support infrastructure is unavailable, national efforts will not be fully successful either.  The answer for post WWII planners was to embed an internationalized and relatively liberalized financial system into the structure of national political authorities.