Historical perspective of transatlantic cooperation

Bernanke in his recent speech reviewing one year of crisis said:

As severe as the economic impact has been, however, the outcome could have been decidedly worse. Unlike in the 1930s, when policy was largely passive and political divisions made international economic and financial cooperation difficult, during the past year monetary, fiscal, and financial policies around the world have been aggressive and complementary. Without these speedy and forceful actions, last October’s panic would likely have continued to intensify, more major financial firms would have failed, and the entire global financial system would have been at serious risk. We cannot know for sure what the economic effects of these events would have been, but what we know about the effects of financial crises suggests that the resulting global downturn could have been extraordinarily deep and protracted.

WSJ Blog summarises the key points in the speech pointing to global cooperation in this crisis.

I was reading this paper from Fabrizio Saccomanni (Banca d’Italia) (presented at this conference , which I pointed here). He tells you about policy cooperation between Europe and US from a historical perspective. He points that both have cooperated on key issues for a while now and it is not as if they are on different planets.

In fact Americans and Europeans have always belonged in the same planet, although they have had their differences of views, interests and approaches ever since Giovanni da Verrazzano sailed through the Narrows into what is now called the New York Bay around 1525. The main source of difficulties in the relationship is, of course, the different political and institutional set-up of the two partners: Americans belong to one nation since 1776, while Europeans belong to sovereign and independent nations, some of which have embarked since 1957 on a process leading to an “ever closer Union”.

To find the appropriate partner for a transatlantic dialogue has never been easy, but I would argue that the Americans have a long history of attempts at establishing a cooperative framework with some willing European nation, sometimes – but not exclusively – to counter the hostility of other countries of the same Continent. France was the first European country to enjoy a “special relationship” with the American States in their early years as a British Colony and later as an independent nation. French political thinkers like Montesquieu exerted a strong influence on the ideas and actions of the “founding brothers” of the United States and it is not by chance that major American political figures, like Benjamin Franklin and Thomas Jefferson, thought it important to serve as American ambassadors to Paris.

This is also pretty neat:

When, after the banking crisis of 1907, the United States decided to establish a Central Bank, Congress conducted hearings with major European central banks in order to draw from their experience in the design of what became in 1913 the Federal Reserve System

Saccomanni then covers cooperation during WWII, post WW-II (that led to setting up of World Bank, IMF and GATT, Marshall Plan etc), Post collapse of Dollar Standard as a currency, etc etc. He also discusses the cooperation in economic/financial crisis which is also very insightful. He then reflects on the future and as he knows history well, has some good points.

Another historical perspective on a very important topic.




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