The G-20 and the Dilemma of Asymmetric Sovereignty: Why Multilateralism Is Failing in Crisis Prevention

Abstract:

The Group of Twenty (G-20) is not able to move forward with the reforms necessary to prevent future financial crises. Successes achieved in crisis management cannot be transformed into joint crisis prevention. The global regulation of financial markets, agreed upon at previous G-20 summits, was intended to make the international financial system more stable and more resilient against future crises.

Alas, the expectations were unfulfilled. At least as serious are the failure of the Doha Round and the incapability of the G-20 to prevent it, despite the frequently voiced commitment to a multilateral order. The structural crisis in current global regulation is not least the result of an asymmetric sovereignty in financial politics: States possess only marginal influence on international financial markets, but they are liable in times of crisis.

The result is a renationalization of financial policies. At the same time, the increasingly critical perception of globalization, in particular in societies of the Organisation for Economic Cooperation and Development (OECD), complicates the further evolution of the multilateral trade order.