ABSTRACT
Ample evidence exists to suggest that the distribution of power in international monetary affairs is changing. But where does monetary power now reside, and what are the implications for governance of the international monetary system? On these questions, uncertainty reigns. The aim of this essay is to shed some new light on the dynamics of power and rule-setting in global finance today. I will begin with a brief discussion of the meaning of power in international
monetary relations, distinguishing between two critical dimensions of monetary power: autonomy and influence. The evolution of international monetary power in recent decades will then be examined. Major developments have dramatically shifted the distribution of power in the system. Many have noted that power is now more widely diffused, both among states and between states and societal actors. Finance is no longer dominated by a few national governments at the apex of the global order. Less frequently remarked is the fact that the diffusion of power has been mainly in the dimension of autonomy, rather than influence-a point of critical importance. While more actors have gained a degree of insulation from outside pressures, few as yet are able to exercise greater authority to shape events or outcomes. Leadership in the system thus has been dispersed rather than relocated-a pattern of change in the geopolitics of finance that might be called leaderless diffusion. A pattern of leaderless diffusion generates greater ambiguity in prevailing
governance structures. Rule-setting in monetary relations increasingly relies not on negotiations among a few powerful states but, rather, on the evolution of custom and usage among growing numbers of autonomous agentsregular patterns of behavior that develop from long-standing practice. Impacts on governance structures can be seen at two levels: the individual state and the global system. At the state level, the dispersion of power compels governments to rethink their commitment to national monetary sovereignty. At the systemic level, it compounds the difficulties of bargaining on monetary issues. Formal rules are increasingly being superseded by informal norms that emerge, like common law, not from legislation or statutes but from everyday conduct and social convention.
