The Role of G8 Economic Summits in Global Monetary Architecture

The 1970s saw turbulent and dramatic economic transitions. The breakdown of the Bretton Woods System introduced new monetary conditions that ended a period of consensus among most capitalist states regarding ideal regimes to form their monetary relations. Until 1971, the interests of financial capital were embedded in domestic and global monetary regimes in what Ruggie termed the “compromise of embedded liberalism” (1982). After the first oil crisis (1974), industrial states faced severe obstacles to accommodate macroeconomic shocks, as well as to address persistent structural problems, substantial current account disequilibria and stagflation. Realizing the complex, and highly volatile nature of the post Bretton-Woods Monetary environment, six of the most industrial¬ized nations, decided to introduce a new informal and confidential instrument for International Economic Policy Coordination (IEPC), the Annual Economic Summits of the Group of Six Countries.