Towards a new ‘Washington consensus’?

The document analyzes the 2008 financial crisis's origins in developed world regulatory failures and macroeconomic imbalances, specifically the US's trade deficits and Asian currency pegs. It evaluates the potential for G20 cooperation on reflating the global economy, reforming financial regulations, and restructuring the IMF. The author argues that while the G20 offers improved legitimacy over the G8, significant hurdles exist due to the US and UK's desire to protect their financial competitive advantages and European resistance to diminishing their influence in multilateral institutions. For South Africa, the brief recommends supporting G20 institutionalization, pushing for a 'floor' of African representation in the IMF, and advocating for Chinese currency appreciation to support industrial exports.

• The 2008 financial crisis was proximately caused by inadequate regulatory frameworks in developed nations, particularly the US, where the rapid expansion of leveraged financial instruments created bubbles and an opaque debt system that led to a 'credit crunch' affecting the real economy.
• Global macroeconomic imbalances, characterized by US trade deficits funded by capital from Asia and oil exporters, and Asian governments' use of undervalued currencies pegged to the US dollar, provided a critical backdrop to the credit crisis.
• The European Monetary Union (EMU) faces systemic risks because member states lack monetary policy autonomy, leaving fiscal policy as the only tool for reflation, which may strain the stability pact; Spain and Italy are noted as particularly vulnerable due to housing bubbles and high debt respectively.
• Developing countries face a 'double-whammy' as developed world banks withdraw capital to shore up their own books and the deepening recession reduces demand for commodity exports.
• Significant conflict exists regarding regulatory reform: the US and UK seek reforms that do not undermine their competitive advantages in global finance, while EMU countries push for wholesale reform.
• Reform of the IMF and other multilateral regulatory bodies is hindered by the fact that European states are over-represented and Asian states are under-represented relative to their global economic weight, and European states are unlikely to agree to diminished influence.
• South Africa's strategic interests include supporting the institutionalization of the G20, maintaining a minimum 'floor' for African representation in the IMF, and advocating for Chinese currency reform to boost industrial growth through exports.

APA

Draper, P. (2008). Towards a new ‘Washington consensus’? South African Institute of International Affairs. https://saiia.org.za/wp-content/uploads/2008/11/Policy-Briefing-2.pdf

Chicago

Draper, Peter. Towards a new ‘Washington consensus’? South African Institute of International Affairs, 2008. https://saiia.org.za/wp-content/uploads/2008/11/Policy-Briefing-2.pdf.

Wikipedia

{{cite report |last1=Draper |first1=Peter |title=Towards a new ‘Washington consensus’? |publisher=South African Institute of International Affairs |date=November 2008 |url=https://saiia.org.za/wp-content/uploads/2008/11/Policy-Briefing-2.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{draper2008towards, author = {Draper, Peter}, title = {{Towards a new ‘Washington consensus’?}}, institution = {South African Institute of International Affairs}, year = {2008}, month = nov, url = {https://saiia.org.za/wp-content/uploads/2008/11/Policy-Briefing-2.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }