Tenenbaum and his family returned from Berlin to Washington DC in September 1948. In October, he started working for the European Recovery Administration (ECA). His friend Charles P. Kindleberger had been the head of the German desk within the State Department to which ECA was attached. But Kindleberger had just left to assume his professorship of economics at MIT. At ECA Tenenbaum was employed as “Assistant Chief (Finance) of the European Trade Policy Branch,” which was part of the Fiscal and Trade Policy Division, of which he finally became Director. He mainly worked on plans for the founding of the European Payments Union in 1950 and on European trade liberalization and market integration. For almost a year, 1950–51, he worked for the IMF on Multiple Currency Practices in the Exchange Restrictions Department. In May 1951, he went back to ECA, which a few months later merged into the MSA. Here he worked on Greek fiscal and currency problems as well as on plans for a currency reform, hopefully as successful in stopping inflation as the West German one. But Greece, in contrast to the German situation in 1948, had its own government and strong interest groups. Therefore, this one of Tenenbaum’s missions failed. This chapter contains reliable annual-income data for his jobs in Berlin and in Washington DC.

Informal institutions in global governance are generally expected to favor powerful states. According to conventional arguments, procedural justice is best secured through formal institutional rules that constrain power, while informal institutions reinforce power asymmetries. This chapter revisits this position and asks, how and under what conditions can informal institutions enhance the voice and influence of less powerful or marginalized actors in global governance? The chapter argues that while informal institutions are useful to powerful states because they remove constraints to individual action, they can also be useful to less powerful states to the extent that they positively support action through social-integrative effects. Specifically, interactions within informal groups generate two types of social effects – capacity-building and coalition-building – that can enhance the voice of developing countries and increase their control over collective decisions. The chapter illustrates the arguments by profiling informal groups in the global governance of trade and finance.

This chapter evaluates the emergence and development of “surveillance” as the preferred non-compliance mechanism within the IMF architecture. This is thanks to its broad flexibility and original mechanism. The nature and scope of surveillance, as well as the factors explaining its success, will be assessed. In contrast, alternative dispute settlement mechanisms, such as international courts, have been resorted to in a limited way. This chapter will therefore highlight the specific role of international law within the field of international monetary relations, as well as illustrating how international monetary relations provide international law with original new tools and concepts.

This chapter examines China’s role and approach in the reforms of global financial governance. It investigates both the reforms of the traditional Bretton Woods institutions that the United States dominates, and the initiation and development of the new financial institutions that China leads, including the Asian Infrastructure Investment Bank (AIIB), the New Development Bank (NDB) and the Multilateral Cooperation Center for Development Finance (MCDF). It finds that China, by walking on two legs, commits to correcting and improving the unsustainable elements of the existing world order, rather than decoupling from it. The success of China’s multilateralism lies in its advocating for the principle of ‘extensive consultation, joint contribution, and shared benefits’, its adherence to high and feasible standards, and its use of a teleological perspective in legal interpretation. As a major driving force behind Chinese multilateralism, China needs to maintain the image of a self-restrained and benign power in international cooperation, while being assured that only an appropriate norm-taker makes a respected norm-maker.

In 1997, a domestic financial crisis broke out with mass chaebol bankruptcy, and then a currency crisis broke out as Japanese banks suddenly pulled short-term loans out with a liquidity crisis at home. Japan was willing to provide the liquidity to cope with the situation; however, the United States brought the case to the IMF to open up South Korea’s capital market and realize its broader national interests in East Asia after the Cold War. South Koreans yet accepted the IMF conditionality willingly to utilize it as a momentum for the reforms they thought desirable. The country carried out thoroughgoing reforms while failing to consider the complementarities between the new and existing institutions. The reforms improved corporate governance and purged the system producing non-performing loans, but they undermined the mechanism of the high economic growth. They also led to the massive layoff of workers and the sale of assets to foreigners.

Affected by the financial crisis and in order to receive financial assistance, several EU member states had to adopt structural adjustment programmes aiming at the reduction of public expenditures. Despite their differences, common feature of all financial assistance schemes was the combination of supranational and international legal instruments and institutions. Newly created financial assistance mechanisms, such as the EFSF and ESM, were created under international law and all financial assistance packages included the participation of the IMF. This hybrid nature of European financial assistance raises the question of whether the actors involved in the award of the assistance are bound by EU human rights. Against this background, this chapter first exposes the doubtful legitimacy of European financial assistance. Second, it analyses the CJEU case law on financial assistance conditionality from a human rights perspective, aiming to respond to the question of whether European actors were and could be bound by human rights when preparing financial assistance conditions. Third, it investigates the possibility of conceiving a legitimate role for courts in applying the procedural and substantive dimension of human rights accountability in times of crisis.

The framework for the legal regulation of cross-border capital flows is critically important yet remains vastly unexplored and undeveloped. The preface introduces the background on the issue and explains how the book aims to fill the void and contribute detailed legal analysis to the ongoing discussion and debate. In contrast with existing literature, this book does not focus on the utility of capital flow management measures (CFMs) but on legal issues of fragmentation and associated problems. Much of the existing literature starts with the premise that members should have an absolute right to maintain CFMs – as a result, over-reading and misinterpreting of provisions is rife. This book has no pre-conceived ideological viewpoint but instead seeks to provide solid analysis on the consistency of CFMs with the trade and investment regimes and to develop a framework to manage and avoid regime conflict in existing and future treaties.

In the absence of an international framework applicable to cross-border capital flows, there is little doubt that the Fund had to assert its authority over capital movements. Without the Fund, a legal lacuna would exist and financial movements would go largely unregulated. Yet, it is less certain whether the Fund ever had the formal legal authority to empower itself to act as a de facto financial authority. A strict reading of the Articles of Agreement suggests that the Fund historically had no mandate over capital movements. Yet, several decades ago the Fund began slowly but steadily appropriating and assuming authority over capital movements. This chapter explores the legal instruments used by the Fund to organise the shift and expansion of its mandate. The chapter makes two major points. First, while the Fund grounded its mandate expansion on the text and wording of the Articles of Agreement, it relied on an Article IV byroad to interpret its constitutive instrument to escape the historical distinction between capital movements and current international transactions. Second, the Fund’s Institutional View of 2012 was not a radical break from tradition but merely a formalization and crystallisation of the ideas and direction it has pursued since 2008.

This chapter explores the legality of the IMF’s shift in mandate, and considers the overarching question of whether the institution was legally entitled to expand its mandate over time through de facto legal doctrines rather than express or implied consent of the members. The analysis begins with a consideration of the legal basis of the Fund’s initiative by examining the international legal theory on the legal personality of international organisations. That is, whether the mandate of an international organization is strictly dependant on the wording of its constitutive instrument(s), or whether the mandate can evolve so as to accommodate new de facto attributions and competences. The Fund’s mandate shift is then tested by taking into account the power of soft law. A key aspect in the legal literature is whether the constituent doctrine of ‘separate will’ or ‘volonté distincte’, which allows an organisation to act independently – that is without the express or implied consent of members – would apply to the mandate expansion as the move ensured the Fund maintained relevancy in an ever-changing world. Finally, the chapter concludes that the Fund’s mandate expansion was in line with the standards of international law applicable to international organisations.

Cross-border capital flows have long played an important role in the world economy. Yet foreign capital brings both benefits and risks to host countries. On the one hand, the expansion of global trade and the related increase in financial transactions have permitted market expansions and created wealth in both industrialized and emerging economies. On the other hand, cross-border capital flows can worsen economic conditions and deepen monetary instability. As a result, while capital account liberalisation and the free flow of capital were once almost universally praised as the solution to foster global economic growth, they have now come under serious scrutiny. In effect, there is an emerging consensus that a more careful and balanced approach to the management of cross-border capital flows is warranted. Before exploring these restraints and the legal and policy framework in which they have evolved, it is necessary to first provide a general overview of the current global financial landscape. This chapter does so by introducing the key pillars of the system – capital flows, the IMF and financial liberalisation – before elaborating on why this traditional approach to free capital flows has slowly but consistently shifted over time.

This chapter considers the theory’s implications for the significant issue of accountability in global governance. My reasoning may appear to suggest a fundamental tension between performance and accountability: If avoiding the thorniest obstacle to performance requires curtailing state influence in the policy process, international institutions presumably cannot be both effective and accountable. I argue, however, that if we embrace a more expansive understanding of how accountability may be institutionalized, no such tradeoff arises. This is because the same factors that nurture policy autonomy make institutions more likely to adopt a variety of modern accountability structures – what I call second-wave accountability (SWA) mechanisms – that primarily benefit and empower non-state actors. Once in place, moreover, SWA mechanisms can themselves deliver performance gains by revealing operational problems, improving the quality of decision-making, and boosting policy compliance. I provide two forms of empirical support for these claims: (1) statistical evidence based on novel data on the spread and strength of SWA mechanisms; and (2) a qualitative plausibility probe focusing on institutions in the issue area of economic development, where many SWA mechanisms were pioneered.

On 2 May 2010, the Eurogroup and the International Monetary Fund agreed to a three-year €110 billion loan to Greece (which was deprived from the private capital markets) in order to avoid a sovereign default. The loan was conditional on the implementation of austerity measures to restore the fiscal balance, privatisation of government assets to keep the debt pile sustainable as well as implementation of structural reforms to improve competitiveness and growth prospects. In October 2011, Eurozone leaders consequently agreed to offer a second €130 billion loan for Greece, conditional not only on the implementation of another austerity package (combined with the continued demands for privatization and structural reforms outlined in the first programme), but also on a restructuring of all Greek public debt held by private creditors. In August 2015, a third programme was agreed, offering Greece an additional €86 billion loan. In 2018, the third programme was concluded. Does this delay reflect the failure of economic adjustment programmes in the case of Greece? The purpose of this chapter is to answer this question.

The relevance of broader public policy considerations in the sovereign debt discourse cannot be ignored given the rise of the perception of sovereign default as a global concern. Recent literature tries to introduce a public law or policy perspective into the sovereign debt discourse, such as the theory of international public authority, l’ordre public de la dette souveraine and an incremental approach. As a matter of judicial interpretation, however, public policy arguments as such cannot override the text of the contract or treaty provisions in force. A better approach will thus be to examine whether and to what extent the applicable contract, statutory and treaty provisions afford such public policy considerations through interpretation in such a manner that practical solutions to holdout problems are deduced without losing the balance between bondholder protection and respect for sovereign debt restructuring.

The object of the chapter is to connect damage awards – the principal means of enforcing investment treaty disciplines – with the ruination produced by the debt crisis of 1980–89, when newly decolonized states experienced forms of tutelage at the hands of international financial institutions. Beginning with a social-theoretical discussion of how debt serves to curb the possibilities for political action, International Monetary Fund borrowing practices in the 1980s are reviewed, then followed by a discussion of the merits of comparison with contemporary investment law. The narrative frames arising during the 1980s debt crisis that resonate in the era of investment treaties are taken up in subsequent sections. In the course of the discussion, the Tethyan Copper award (a US$6 billion award against Pakistan for expropriation of an undeveloped mining site) is discussed. The aim is to reveal that indebtedness in the contemporary world serves functions similar to those in the 1980s, namely, to constrain public capacity in a wide range of sectors.