ABSTRACT
This chapter focuses on the international financial system which comprises a wide range of central banks, domestic public banks, domestic and transnational private banks, international organisations that are involved in the process of issuing national currencies and world money, and negotiating agreements and enforcing the regulations of international banking. Much of the finance and development literature has focused on the beneficial effects on developing countries of having access to credit from international resources. Concern has been expressed in academic and policy circles about the loss of macroeconomic policy autonomy by financial globalisation and the unrestricted influx of short-term capital. Conventional wisdom associates the benefits of increased internationalisation with the global diffusion of wealth through the distribution of advanced technology to developing countries via direct investments from the corporate sector of developed countries. The chapter examines the Latin American regional integration experience, and specifically the Mercado Comun del Sur experiment.
