The Structure of the Global Economy

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The Structure of the Global Economy
Briefly describe the evolution of the current global governance system
After the great depression and two World Wars, the world was reeling from the effects of these events. With major countries facing financial crises, an effort was put in place to develop international bodies to offer assistance. This led to the formation of the World Bank, the International Monetary Fund (IMF) and the World Trade Organization (WTO). The World Bank was initially formed to help countries rebuild after the wars but later shifted to helping emerging economies to develop. The IMF was created to maintain the designed exchange rate in the world at the time. However, its role shifted to providing loans to countries undergoing a crisis. The WTO was formed to assist in the multilateral trading system after the World Wars but later transformed to act as a dispute resolution body for trade conflicts.
Briefly describe three types of financial crises and provide an example of each.
A currency crisis such as the Asian financial crisis experienced in 1997 occurred due to a speculative attack on the currency whereby people can bet on whether the currency can either go up or down and proactively get involved in trying to get the currency to fluctuate. The involvement of other parties thus causes a further devaluation of a currency, which can disrupt financial systems.
A banking crisis such as the one experienced in Iceland in 2008 occurs when there is a sudden shift in banking systems such as a decrease in the money supply, reducing confidence in the system. This can escalate globally and affect other banks due to their interconnectivity.
Lastly, a foreign debt crisis like the one experienced...