The Political Economy of Currency Swaps: Drives for the Global Periphery

Abstract

The outbreak of the United States´ financial crisis in 2007/2008 and its rapid expansion around the globe incited several political and economic changes, most particularly in the monetary and financial dimensions. The emergence of a swap agreement complex between monetary authorities of a heterogeneous group of economies became one of the most complete expressions of those changes. Argentina Republic was not immune to these new trends in the contemporary financial and monetary diplomacy by signing agreements with Brazil and China, in particular. The aim of this article is to investigate the rationale and scope of the emerging complex of bilateral currency agreements. Specifically, the article intends to scrutinize, in the light of the recent Argentina experience, if these agreements form the basis of a substantive reform in the monetary and financial systems or, conversely, they are marginal responses to institutional challenges of present days.