The Cost of Free Money

A penetrating account of how unchecked capital mobility is damaging international cooperation, polarizing the economic landscape, and ultimately reshaping the global order.

When it comes to the afflictions of the global economy, almost everyone—and especially Donald Trump—is quick to point the finger of blame at the state of international trade. But what about unconstrained capital flows? Unfettered capital has resulted in a string of financial and economic crises that have left our political systems strained and dialogue corroded. The once perceived benefits of openness have been cast to the wayside and the cracks in the global order can no longer be ignored.

Paola Subacchi argues that international cooperation and interdependence have become crippled. Regional restrictions will soon strengthen and a multipolar order will take shape, leading to a distinctly transformed economic landscape in which China challenges the dominance of the US dollar. Combining history, analysis, and prediction, this book provides penetrating insight into the challenges facing the international economic order.

You can find some reviews of the book here.

The Cost of Free Money was named one of the Best Economics Books of 2020 by the Financial Times.

The People’s Money

The People's Money

Many of the world’s major economies boast dominant international currencies. Not so for China. Its renminbi has lagged far behind the pound, the euro, and the dollar in global circulation—and for good reason. China has long privileged economic policies that have fueled development at the expense of the renminbi’s growth, and it has become clear that the underpowered currency is threatening China’s future. The nation’s leaders now face the daunting task of strengthening the currency without losing control of the nation’s economy or risking total collapse. How are they approaching this challenge?

In The People’s Money, Paola Subacchi introduces readers to China’s monetary system, mapping its evolution over the past century and, particularly, its transformation since Deng Xiaoping took power in 1978. Subacchi revisits the policies that fostered the country’s economic rise while at the same time purposefully creating a currency of little use beyond China’s borders. She shows the key to understanding China’s economic predicament lies in past and future strategies for the renminbi. The financial turbulence following the global crisis of 2008, coupled with China’s ambitions as a global creditor and chief economic power, has forced the nation to reckon with the limited international circulation of the renminbi. Increasing the currency’s reach will play a major role in securing China’s future.

Reviewed by:

Foreign Affairs

Asian Review of Books

Times Higher Education

Managing Complexity

The global financial crisis of 2007–09 highlighted the economic interdependencies between all major countries, raising the issues of international cooperation. Managing Complexity looks at how, following the global financial crisis, countries have changed the way they cooperate with each other on matters of economic policy.

In this volume, the result of a joint research project of Chatham House and the International Monetary Fund, researchers and policymakers who were directly involved in the crisis take a critical look at the challenges facing international policy cooperation in the new postcrisis environment and at how the theory and practice of cooperation have evolved as a result of the crisis.

The Gulf Region

The oil boom of the last three years has accelerated growth in financial market activities across the Gulf region and in Islamic financial and banking activities overall. The countries of the Gulf Cooperation Council (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the UAE) are one of the fastest growing parts of the world economy. Burgeoning wealth has strengthened the demand for more sophisticated financial services. Rising transaction volumes have made a compelling case for building the infrastructure to expand services while justifying the cost. These investments in financial market capability have accelerated the development of a financial services industry in the region and introduced new instruments, prompting banking and financial institutions to set up in the Gulf. This book examines the Gulf region as a financial center and an economic power hub, focusing on its role in the world economy and capital markets. In particular, the authors address the issue of whether wealth alone is enough to create an international financial center. They also assess how many financial centers the Gulf can support and who has the best chance of making the transformation from regional player to global leader. This timely book is the first to provide an overall analysis of the strengths and weaknesses of the region, assessing its global aspirations and exploring long-term trends.

Contributors include Ahmet Akarli (Goldman Sachs), Alexander Böhmer (OECD), Florence Eid (Pantera Capital LP),Tarek Fadlallah (Nomura), Ghaleb Faidi (ILMAM), Andrea Goldstein (OECD), Daniel Hanna (Standard Chartered Bank), Michael Hume (Lehman Brothers), Stephen Jen (Morgan Stanley),Vanessa Rossi (Chatham House and Oxford Economics), and Andrew Rozanov (State Street Global Advisors).