State Emissary, November 2017. Issue 1 2017 Edition | Page 39

SM |DEVELOPMENT
other problems—both as a version of the original Asian
Monetary Fund proposal from the 1990s and as a
substitute for the global institutions. The Chiang Mai
Initiative started in 2000 with a series of bilateral swap
arrangements between 10 southeast Asian countries
plus China, Japan, and South Korea that allowed a
country in need of a foreign currency to borrow it from
another member of the initiative (though there have
been no swaps yet). The 2008 global crisis intensified
the regional push: in 2010 the Chiang Mai
arrangements were enhanced, and new institutions
began, notably the New Development Bank (popularly
called the BRICS bank) in 2013 and the Asia
Infrastructure Investment Bank in 2016.
the provision of financial facilities—where regional
resources are increasingly important—and the design
of policy, which has global ramifications?
Design questions
There were three distinct ways multilateral
governance institutions operated in the era of postwar
stability. The first was in a judicial or quasijudicial role
in arbitrating disputes between countries. There are
many cases that look as if they require arbitration:
trade disputes and—often associated with trade
disputes—whether currencies are unfairly valued to
produce a subsidy for exporters.
The new emphasis on sovereignty—in the United
Some lessons emerge from the increasingly
Kingdom and elsewhere in Europe where
decentralized governance of the international system.
“sovereignists” confront “globalists”—pushes back
Each major challenge—the 1970s inflation and oil price
against this type of arbitration. In the past, the United
shocks and the recent global crisis—produced some
States has used the World Trade Organization’s
new approaches to multilateral
dispute settlement mechanism
cooperation and coordination:
to justify keeping trade open.
the G5 in 1975 and the G20
Currency misalignment was a
advanced and emerging market
much more difficult issue for
economies in 2008. In each
international settlement, and in
“ There were three distinct ways
ca