A CFR Book. Yale University Press
As a global economic crisis unfolds, a new book by CFR director of international economics Benn Steil and former Salvadoran finance minister Manuel Hinds warns that the incompatibility of globalization and the international monetary system will spark new political tensions and undermine free trade.
Money, Markets, and Sovereignty explains that eras of greater protectionism have historically coincided with monetary nationalism, while eras of liberal trade have been accompanied by a universal monetary standard, such as the gold standard used in the late 19th century. Today, international economic relations are marked by an unprecedentedly liberal global trade regime that is operating side by side with an extreme doctrine of monetary nationalism, in which the vast majority of countries use currencies unacceptable to foreigners.
Steil and Hinds warn that this situation is bound to trigger periodic crises, and call for a revival of the political and economic thinking that distinguished earlier great periods of globalization—ideas that are increasingly under threat by more recent concepts of sovereignty. The book offers historical perspective on why currencies rise and fall, concluding that global financial security is being crippled by monetary nationalism.
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"The authors deliver an exceptionally timely warning of the catastrophic consequences of monetary nationalism, parochial sovereignty and corruptible currencies. Put Money, Markets and Sovereignty on your 2009 list of must-read books."
—Globe and Mail
"A well-documented defense of globalization."
"Thoroughly researched and effectively argued ... a fine intellectual history."
"Stimulating reading. Thoughtful and well written, bringing new perspectives."
—Otmar Issing, first chief economist, European Central Bank
"Money, Markets, and Sovereignty offers an unusually wide-ranging and historically informed examination of contemporary controversies over globalization, and provides a searching exploration of the tensions between money as an emblem of national sovereignty and its role as a fundamental tool of individual choice."
—Jerry Z. Muller, author of The Mind and the Market: Capitalism in Western Thought
"This book is an important analysis of the roles of money and sovereignty in advancing globalization and its positive effects on living standards. Particularly in this era of political skepticism over gains from globalization, Steil and Hinds have written an essential text for our new leaders and those who advise them."
—Glenn Hubbard, dean and Russell L. Carson professor of finance and economics, Columbia Business School
"Steil and Hinds have written a revelatory historical essay on the relationship between money and the state, emphasizing that from the very origins of coinage, rulers sought to establish and exploit monopolies over currencies. This, more than anything else, helps to explain the many inflations and other monetary disruptions in history. At a time when a global financial crisis is revealing the limits of state control over the money that banks create, this is a timely and original contribution."
—Niall Ferguson, Laurence A. Tisch Professor of History, Harvard University, and author of The Ascent of Money
"Money, Markets, and Sovereignty presents an extremely valuable and timely examination of the pros and cons of modern globalization, set against a background of illuminating historical precedents and debates."
—William H. Donaldson, twenty-seventh chairman of the Securities and Exchange Commission
Benn Steil is senior fellow and director of international economics at the Council on Foreign Relations and founding editor of the journal International Finance. He is the coauthor of Financial Statecraft, published by Yale University Press. He lives in New York City.
Manuel Hinds is a business and government consultant and former Council on Foreign Relations fellow. He has twice served as minister of finance in El Salvador. He is the author of Playing Monopoly with the Devil, published by Yale University Press. He lives in San Salvador.