Globalization and monetary inconvertibility

Vol. 28 No. 4 (2008)

Oct-Dec / 2008
Published October 1, 2008
PDF-Portuguese (Português (Brasil))
PDF-Portuguese (Português (Brasil))

How to Cite

Carneiro, Ricardo. 2008. “Globalization and Monetary Inconvertibility”. Brazilian Journal of Political Economy 28 (4):539-56. https://centrodeeconomiapolitica.org/repojs/index.php/journal/article/view/541.

Globalization and monetary inconvertibility

Ricardo Carneiro
Professor do Instituto de Economia e pesquisador do Centro de Estudos de Conjuntura e Política Econômica da Unicamp
Brazilian Journal of Political Economy, Vol. 28 No. 4 (2008), Oct-Dec / 2008, Pages 539-556

Abstract

The central hypothesis of this article is that in the context of globalization, monetary inconvertibility is a crucial problem of peripheral countries. It begins with a brief review of the debate from a historical point of view and then stresses the contemporary opposite’s views on the fragility of financial system of emerging countries: the original sin and the debt intolerance hypothesis. Despite of supporting the first one, the article goes further and explores the domestic implication of inconvertibility. It criticizes the jurisdicional uncertainty proposition showing that an inherent flaw in the store of value of emerging market currencies, derived from original sin is the main reason for de facto inconvertibility and underdevelopment of domestic financial system of these countries.

JEL Classification: O110.


Keywords: Globalization convertibility exchange rate volatility interest rate volatility financial deepening