By Sandra Heep
Against the backdrop of China’s more and more influential position within the foreign monetary structure, this publication seeks to represent and assessment China’s monetary energy capability. It does so by way of studying the connection among household monetary repression and overseas monetary energy within the context of the political economic climate of the developmental nation. at the foundation of a unique theoretical framework for the research of the monetary energy power of developmental states, the publication offers an in-depth research of China’s method of forex internationalization, its creditor prestige and its regulations in the direction of the Bretton Woods associations whereas contrasting the country’s current function in international finance with the placement of the japanese developmental nation within the Eighties and 1990s.
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Extra resources for China in Global Finance: Domestic Financial Repression and International Financial Power
Structural financial power is a state’s ability to influence other states indirectly through the structure of the international financial system. Institutional financial power is a state’s ability to influence other states indirectly through the policy decisions of international financial institutions. Whereas relational financial power is by definition manipulative, structural financial power as well as institutional financial power can be exercised in a manipulative as well as a non-manipulative way.
According to Helleiner (2006: 80–82) we can thus distinguish between two different aspects of the mechanism of entrapment that establish two different aspects of structural financial power: Whereas the issuer of an international currency gains the power to reshape economic geography via the alteration of transaction costs, it gains the power to reconstruct economic interests via the creation of dependencies on the value and stability of its currency. 1). 4 Preview of the Argument On the basis of the preceding conceptualization of the developmental state and the development of a typology of financial power, a preliminary explanation of the implications of the political economy of the developmental state for its ability to acquire financial power can now be provided.
3 A Typology of Financial Power 23 regard is the authorities’ ability to keep interest rates low and mandate domestic financial institutions to purchase sterilization bonds. A state’s ability to acquire foreign exchange reserves is thus significantly bolstered by the maintenance of a system of financial repression. As Cohen (2006: 43–46) has pointed out, a state’s external borrowing capacity depends on the international attractiveness of its financial markets and the assessment of its creditworthiness by foreign investors.