Hostname: page-component-586b7cd67f-2plfb Total loading time: 0 Render date: 2024-11-24T20:11:31.505Z Has data issue: false hasContentIssue false
  • English
  • Français

Critical macro-finance: A theoretical lens

Published online by Cambridge University Press:  09 November 2023

Daniela Gabor
Daniela Gabor*
Affiliation:
University of the West of England, UK
*
Corresponding author: Daniela Gabor, University ofthe West of England, Frenchay Campus, Coldharbour Lane, Bristol, BS16 1QY, UK.Email: [email protected].
Rights & Permissions [Opens in a new window]

Extract

Core share and HTML view are not available for this content. However, as you have access to this content, a full PDF is available via the ‘Save PDF’ action button.

This forum contribution outlines four propositions of the critical macro-finance approach: (1) US-led financial globalization has structurally evolved around market-based finance, driven by the production of new asset classes and the Americanization of national financial systems with changing practices for producing liquidity; (2) global finance is a set of interconnected, hierarchical balance sheets, increasingly subject to time-critical liquidity; (3) credit creation in market-based finance involves new forms of money (systemic liabilities); and (4) market-based finance structurally requires a derisking state, for both systemic liabilities and for new asset classes. The precise contours of the derisking state are determined through political struggles.

Type
Forum: Critical macro-finance
Information
Finance and Society , Volume 6 , Issue 1 , 2020 , pp. 45 - 55
Creative Commons
Creative Common License - CCCreative Common License - BYCreative Common License - NCCreative Common License - ND
This is an Open Access article, distributed under the terms of the Creative Commons Attribution-NonCommercial-No Derivatives licence (http://creativecommons.org/licenses/by-nc-nd/4.0/), which permits noncommercial re-use, distribution, and reproduction in any medium, provided the original work is unaltered and is properly cited. The written permission of Cambridge University Press must be obtained for commercial re-use or in order to create a derivative work.
Copyright
© 2020 The Author(s)

References

Adrian, T. and Shin, H.S. (2010) Liquidity and leverage. Journal of Financial Intermediation, 19(3): 418–37.Google Scholar
Aldasoro, I. and Ehlers, T. (2018) The geography of dollar funding of non-US banks. BIS Quarterly Review, December: 15–26.Google Scholar
Ban, C. (2016) Ruling Ideas: How Global Neoliberalism Goes Local. Oxford: Oxford University Press.Google Scholar
Beggs, M. (2012) Liquidity as a social relation. Paper presented to the Eastern Economic Association conference. Boston, 28 February.Google Scholar
Birk, M. and Thiemann, M. (2020) Open for business: Entrepreneurial central banks and the cultivation of market liquidity. New Political Economy, 25(2): 267–83.Google Scholar
Blyth, M. (2003) The political power of financial ideas: Transparency, risk, and distribution in global finance. In: Kirshner, J. (ed.) Monetary Orders: Ambiguous Economics, Ubiquitous Politics. Ithaca, NY: Cornell University Press, 239–59.Google Scholar
Blyth, M. and Matthijs, M. (2017) Black swans, lame ducks, and the mystery of IPE's missing macroeconomy. Review of International Political Economy, 24(2): 203–31.Google Scholar
Bonizzi, B. and Kaltenbrunner, A. (2020) Critical macro-finance, Post Keynesian monetary theory and emerging economies. Finance and Society, 6(1): 76–86.Google Scholar
Borio, C., McCauley, R.N. and McGuire, P. (2017) FX swaps and forwards: Missing global debt? BIS Quarterly Review, September: 37–54.Google Scholar
Bortz, P. and Kaltenbrunner, A. (2018) The international dimension of financialization in developing and emerging economies. Development and Change, 49(2): 375–93.Google Scholar
Botta, A., Caverzasi, E. and Russo, A. (2020) When complexity meets finance: A contribution to the study of the macroeconomic effects of complex financial systems. Research Policy, https://doi.org/10.1016/j.respol.2020.103990.Google Scholar
Braun, B. (2018) Central banking and the infrastructural power of finance: The case of ECB support for repo and securitization markets. Socio-Economic Review, https://doi.org/10.1093/ser/mwy008.Google Scholar
Braun, B. and Gabor, D. (2019). Central banking, shadow banking, and infrastructural power. In: Mader, P., Mertens, D. and van der Zwan, N. (eds.) The Routledge international Handbook of Financialization. London: Routledge, 241–52.Google Scholar
Braun, B., Krampf, A. and Murau, S. (2020) Financial globalization as positive integration: monetary technocrats and the Eurodollar market in the 1970s. Review of International Political Economy, https://doi.org/10.1080/09692290.2020.1740291.Google Scholar
Bruno, V. and Shin, H.S. (2015) Capital flows and the risk-taking channel of monetary policy. Journal of Monetary Economics, 71(April): 119–32.Google Scholar
Converse, N., Levy-Yeyati, E. and Williams, T. (2020) How ETFs amplify the global financial cycle in emerging markets. International Finance Discussion Paper No. 1268. Washington, D.C.: Institute for International Economic Policy.Google Scholar
Dafermos, Y., Gabor, D. and Michell, J. (2020) Institutional supercycles: An evolutionary macro-finance approach. Rebuilding Macroeconomics Working Paper.Google Scholar
Dutta, S.J. (2018) Sovereign debt management and the globalization of finance: Recasting the City of London's ‘Big Bang’. Competition & Change, 22(1): 3–22.Google Scholar
Fichtner, J. (2017) Perpetual decline or persistent dominance? Uncovering Anglo-America's true structural power in global finance. Review of International Studies, 43(1): 3–28.Google Scholar
Fichtner, J., Heemskerk, E.M. and Garcia-Bernardo, J. (2017) Hidden power of the Big Three? Passive index funds, re-concentration of corporate ownership, and new financial risk. Business and Politics, 19(2): 298–326.Google Scholar
Fisher, P.R. (2013) Reflections on the meaning of ‘risk free’. BIS Paper No. 72. Basel: Bank for International Settlements.Google Scholar
Gabor, D. (2013) The financialisation of the Romanian economy: From central bank-led to dependent financialization. FESSUD Study No. 05. Available at: <https://ideas.repec.org/p/fes/fstudy/fstudy05.html>. Accessed 10 May 2020..+Accessed+10+May+2020.>Google Scholar
Gabor, D. (2016) The (impossible) repo trinity: The political economy of repo markets. Review of International Political Economy, 23(6): 967–1000.Google Scholar
Gabor, D. (2018) Goodbye (Chinese) shadow banking, hello market-based finance. Development and Change, 49(2): 394–419.Google Scholar
Gabor, D. (2019) Securitization for Sustainability: Does It Help Achieve the Sustainable Development Goals? Washington, D.C.: Heinrich Böll Stiftung.Google Scholar
Gabor, D. (2020) The Wall Street consensus. Mimeo, UWE Bristol.Google Scholar
Gabor, D. and Ban, C. (2016) Banking on bonds: The new links between states and markets. Journal of Common Market Studies, 54(3): 617–35.Google Scholar
Gabor, D., Dafermos, Y., Nikolaidi, M., Rice, P., van Lerven, F., Kerslake, R., Pettifor, A. and Jakobs, M. (2019) Finance and climate change: A progressive green finance strategy for the UK. Report of the independent panel commissioned by Shadow Chancellor of the Exchequer John McDonnell MP.Google Scholar
Gabor, D. and Vestergaard, J. (2016) Towards a theory of shadow money. INET Working Paper. Institute for New Economic Thinking.Google Scholar
Gabor, D. and Vestergaard, J. (2018) Chasing unicorns: The European single safe asset project. Competition & Change, 22(2): 139–64.CrossRefGoogle Scholar
Gallagher, K.P. (2015) Ruling Capital: Emerging Markets and the Reregulation of Cross-Border Finance. Ithaca, NY: Cornell University Press.Google Scholar
Genito, L. (2019) Mandatory clearing: The infrastructural authority of central counterparty clearing houses in the OTC derivatives market. Review of International Political Economy, 26(5): 938–62.CrossRefGoogle Scholar
Gonzalez, R., Khametshin, D., Peydró, J.-L. and Polo, A. (2019) Hedger of last resort: Evidence from Brazilian FX interventions, local credit and global financial cycles. BIS Working Paper, 832. Basel: Bank for International Settlements.Google Scholar
Gorton, G. and Metrick, A. (2012) Securitized banking and the run on repo. Journal of Financial Economics, 104(3): 425–51.Google Scholar
Haldane, A. (2014) The age of asset management? Speech delivered at the Bank of England. London, 4 April. Available at: <https://www.bankofengland.co.uk/speech/2014/the-age-of-asset-management>. Accessed 11 May 2020..+Accessed+11+May+2020.>Google Scholar
Hardie, I. and Howarth, D. (eds.) (2013) Market-Based Banking and the International Financial Crisis. Oxford: Oxford University Press.Google Scholar
Helgadóttir, O. (2016) Banking upside down: The implicit politics of shadow banking expertise. Review of International Political Economy, 23(6): 915–40.Google Scholar
Helleiner, E. (2016) Still an extraordinary power after all these years: The US and the global financial crisis of 2008. In: Germain, R. (ed.) Susan Strange and the Future of Global Political Economy. London: Routledge, 93–108.Google Scholar
IMF and World Bank (2020) Staff note for the G20 International Financial Architecture Working Group: Recent developments on local currency bond markets in emerging economies. Riyadh, 31 January.Google Scholar
Jahnke, P. (2019) Holders of last resort: The role of index funds and index providers in divestment and climate. SSRN Working Paper, 3314906.Google Scholar
Karwowski, E. (2019) Towards (de-) financialisation: The role of the state. Cambridge Journal of Economics, 43(4): 1001–27.Google Scholar
Kindleberger, C.P. (1978) Manias, Panics and Crashes: A History of Financial Crises. New York, NY: John Wiley.Google Scholar
Knafo, S. (2020) Macro-finance and the financialisation of economic policy. Finance and Society, 6(1): 87–94.Google Scholar
Konings, M. (2007) The institutional foundations of US structural power in international finance: From the re-emergence of global finance to the monetarist turn. Review of International Political Economy, 15(1): 35–61.Google Scholar
Konings, M. (2018) Capital and Time: For a New Critique of Neoliberal Reason. Stanford, CA: Stanford University Press.Google Scholar
Macalos, J.P.S. (2017) Foreign exchange swaps: A near substitute for international reserves in peripheral countries? Paper prepared for the 21st FMM conference of the Macroeconomic Policy Institute. Berlin, 9-11 November.Google Scholar
Marshall, D. and Steigerwald, R. (2013) The role of time-critical liquidity in financial markets. Economic Perspectives, 37(2): 30–47.Google Scholar
Mehrling, P. (2000) Minsky and modern finance. The Journal of Portfolio Management, 26(2): 81–88.Google Scholar
Mehrling, P. (2013) The inherent hierarchy of money. In: Taylor, L., Rezai, A. and Michl, T. (eds.) Social Fairness and Economics: Economic Essays in the Spirit of Duncan Foley. London: Routledge, 394–404.Google Scholar
Mehrling, P. (2017) Financialization and its discontents. Finance and Society, 3(1): 1–10.Google Scholar
Minsky, H.P. (1957) Central banking and money market changes. The Quarterly Journal of Economics, 71(2): 171–87.Google Scholar
Murau, S. (2017) Shadow money and the public money supply: The impact of the 2007-2009 financial crisis on the monetary system. Review of International Political Economy, 24(5): 802–38.Google Scholar
Murau, S. and Pforr, T. (2020) What is money in a critical macro-finance framework? Finance and Society, 6(1): 56–66.Google Scholar
Nikolaidi, M. (2015) Securitisation, wage stagnation and financial fragility: A stock-flow consistent perspective. Greenwich Papers in Political Economy No. 27.Google Scholar
Pape, F. (2020) Rethinking liquidity: A critical macro-finance view. Finance and Society, 6(1): 67–75.CrossRefGoogle Scholar
Petry, J. (2020) Financialization with Chinese characteristics? Exchanges, control and capital markets in authoritarian capitalism. Economy and Society, https://doi.org/10.1080/03085147.2020.1718913.Google Scholar
Petry, J., Fichtner, J. and Heemskerk, E. (2019) Steering capital: The growing private authority of index providers in the age of passive asset management. Review of International Political Economy, https://doi.org/10.1080/09692290.2019.1699147.Google Scholar
Pistor, K. (2019) The Code of Capital: How the Law Creates Wealth and Inequality. Princeton, NJ: Princeton University Press.Google Scholar
Pozsar, Z. (2014) Shadow banking: The money view. SSRN Working Paper, 2476415.Google Scholar
Rey, H. (2015). Dilemma not trilemma: The global financial cycle and monetary policy independence. NBER Paper No. w21162. National Bureau of Economic Research.Google Scholar
Schwartz, H.M. (2019) American hegemony: Intellectual property rights, dollar centrality, and infrastructural power. Review of International Political Economy, 26(3): 490–519.Google Scholar
Sgambati, S. (2016) Rethinking banking: Debt discounting and the making of modern money as liquidity. New Political Economy, 21(3): 274–90.Google Scholar
Sissoko, C. (2019) Repurchase agreements and the (de) construction of financial markets. Economy and Society, 48(3): 315–41.Google Scholar
Smaghi, L.B. (2010) Monetary policy transmission in a changing financial system: Lessons from the recent past, thoughts about the future. Speech at the Barclays Global Inflation Conference. New York City, 14 June.Google Scholar
Spears, T. (2019) Discounting collateral: Quants, derivatives and the reconstruction of the ‘risk-free rate’ after the financial crisis. Economy and Society, 48(3): 342–70.Google Scholar
Tooze, A. (2018) Crashed: How a Decade of Financial Crises Changed the World. London: Penguin.Google Scholar
van't Klooster, J. and Fontan, C. (2019) The myth of market neutrality: A comparative study of the European Central Bank's and the Swiss National Bank's corporate security purchases. New Political Economy, https://doi.org/10.1080/13563467.2019.1657077.Google Scholar
Wray, L.R. (2011). Minsky's money manager capitalism and the global financial crisis. International Journal of Political Economy, 40(2): 5–20.Google Scholar
Youngman, A. (1906) The growth of financial banking. Journal of Political Economy, 14(7): 435–43.Google Scholar