Dangerous derivatives: controlling and creating risks in international money

The liberalisation of global capital markets during the last two decades ha s been associated with increased liquidity and volatility in finance. Durin g the past two decades the global financial system has been transformed. Ma rkets have opened, exchange controls been removed, interest rates become mo re volatile and financial institutions have become among the most important arbiters in the global political economy. These processes have, undoubtedl y, contributed to the relative success of the liberal growth model which, f ar more socially brutal than it's Keynesian predecessor, is putting deep ro ots down into the capitalist earth. Yet these transformations in the financ ial arena have been accompanied by a sweeping away of many of the old secur ities which underwrote the Keynesian model. This paper argues that the regu latory response to these developments was both slow and inadequate, embodyi ng- as it does- a liberal, pro-market logic. (C) 2000 Elsevier Science Ltd. All rights reserved.