US Financial Power: Sources, Mechanisms, Limits

529
DOI: 10.20542/0131-2227-2019-63-6-49-57

M. Petrov (mvpmgimo@mail.ru),
MGIMO University, 76, Prosp. Vernadskogo, Moscow, 119454, Russian Federation;
V. Tkachev (tkachev_mgimo@mail.ru),
MGIMO University, 76, Prosp. Vernadskogo, Moscow, 119454, Russian Federation;
V. Onuchak (v.onuchak@inno.mgimo.ru),
MGIMO University, 76, Prosp. Vernadskogo, Moscow, 119454, Russian Federation

Abstract. The article analyzes the origins, mechanisms and limits of the US financial power that provides its long-term dominance in the contemporary global financial system. It is shown that this power is a complex systemic phenomenon in the post-WWII international relations. It manifests itself most clearly in the international capital flows. Thanks to this power, the US can influence the behavior of its other participants. This implies that the USA possess the “exorbitant” privileges, namely, the ability to import large amounts of capital to cover the current account deficit and at the same time receive net investment income from international financial transactions. Despite the rapid growth of external liabilities the United States continues to successfully use these privileges. This is evidenced by the fact that in 2017 import of capital and net investment income reached a maximum level in the post-crisis period. The authors distinguish two groups of factors of US financial power: primary (economic and military power, foreign policy weight, developed financial market) and secondary factors which include the world dollar leadership, leading positions of American financial institutions in the international financial market, and the US influence on the system of organizations that form the architecture and information infrastructure of the global financial system, including the IMF, international development banks, largest information and rating agencies and analytical centers. Together, these factors determine the high viability and sustainability of US financial power. In addition, the United States can maintain its power through the mechanisms of direct and indirect influence on other countries, including monetary policy, allowing them to protect their privileged position in world finances and, if necessary, weaken potential competitors. All this will contribute to the preservation of US leadership in the financial sphere in the foreseeable future.

Keywords: USA, financial power, world financial system, international capital flows, international political economy


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For citation:
Petrov M., Tkachev V., Onuchak V. US Financial Power: Sources, Mechanisms, Limits. World Eonomy and International Relations, 2019, vol. 63, no. 6, pp. 49-57. https://doi.org/10.20542/0131-2227-2019-63-6-49-57



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