Abstract
The balance of payments is an essential tool to understand international trade and global capital flows. When the financial account of the balance of payment posts a deficit, the domestic economy records net capital outflows and acquires foreign liabilities issued by the rest of the world. Conversely, when the financial account of the balance of payments posts a surplus, the domestic economy records net capital inflows and issues a foreign liability, accumulated as a claim by the rest of the world. The purpose of this chapter is to study in detail these fundamental mechanisms, as well as their implications for international macroeconomic analysis. It also provides an in-depth analysis and discussion of the various phases in the international financial architecture since the 19th century, as seen from a sustainability perspective.
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Notes
- 1.
At the time, France used a so-called dual foreign exchange market: there was a market for the commercial franc, with a fixed exchange rate, (thanks to the intervention of an Exchange Stabilization Fund), and a free-floating market for the financial franc, on which the monetary authorities refrained from intervening, and whose rate resulted from a free confrontation of supply and demand.
- 2.
The yuan is the unit of account, and the renminbi (literally: “the people’s currency”) is the name of China’s currency.
- 3.
In Greek mythology, the Minotaur was a fabulous monster half-man and half-bull. Born from the union of Pasiphae (wife of King Minos) and a white bull sent by Poseidon, it was locked up by Minos in the labyrinth. Located in the center of Crete, the labyrinth was built by Daedalus so that the Minotaur could not escape, and that no one would discover its existence. Every nine years, Aegeus, king of Athens, had to deliver seven boys and seven girls to the Minotaur who fed on human flesh. Theseus, son of Aegeus, volunteered to go into the labyrinth and killed the Minotaur.
- 4.
At its inception, the ECU was based on the deutsch mark, the pound sterling, the French franc, the lira, the guilder, the Belgian franc, the Luxembourg franc, the Danish krone and the Irish pound.
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Didier, R., Lagoarde-Segot, T. (2023). Global Imbalances and the International Financial Architecture . In: Lagoarde-Segot, T. (eds) Ecological Money and Finance. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-031-14232-1_9
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DOI: https://doi.org/10.1007/978-3-031-14232-1_9
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