During the last thirty years, most governments around the world have supported the long-run process of financial expansion that turned out to be characterized as the “financialization” of the capitalist economy. In this historical scenario, monopoly-finance capital became increasingly dependent on bubbles that, both in credit and capital markets, proved to be global sources of endogenous financial fragility. Financial and currency crises have also revealed that monetary and supervisory authorities do not cope with the complexity of the global, profit-seeking, innovative and speculative portfolios of investors and banks. Central banks, in a context of financial liberalization, do not face financial disturbances easily. Indeed, credit squeeze, volatility in the valuation of assets, the menace of recession, the shift of investors toward liquid and safe assets, among other factors, put pressure on central banks and treasuries.
As a matter of fact, central banks´ actions are not independent from private and public pressures. There are social and political tensions inherent to the current crisis: the impacts on livelihood conditions, the loss of social cohesion and the subordination of society to the bailouts of the financial systems. The increasing growth of sovereign-debts imposes the adoption of government austerity programs that mainly rely on taxpayers. As a result, the social tensions that have emerged within the markets have been shifted to the political sphere and proved to challenge money as a public good.
Indeed, the idea of autonomous monetary management has collapsed under the 2008 global financial crisis. Since the 1980s, in truth, the so called New Consensus Macroeconomic, founded on the belief in the potential of the self-regulated markets to promote economic growth, turned out to favor financial accumulation and social exclusion. In this scenario, central banks and treasuries has lost space of maneuver in order to promote financial stability and inclusive growth.
As current global finance has subordinated social reproduction, the main question is, as Minsky (1986) warned, Who will Benefit?. The current global crisis showed that global finance, as a historically set of institutions, products, procedures, behaviours and policies have potentially materialized the risk of collapse of the financial system with deep negative consequences for the real economy and society. In order to support sustainable development, it’s time to rethink global finance, as well as its policy agenda about global and corporate governance, prudential regulation and supervision of systemic risk.