Drezner, Daniel W. "The System Worked: Global Economic Governance during the Great Recession". World Politics, Vol.66, No.1 (2014): 123-164.

Drezner, Daniel W. "The System Worked: Global Economic Governance during the Great Recession". World Politics, Vol.66, No.1 (2014): 123-164.

• The 2008 financial crisis was the biggest economic crisis since the Great Depression, resulting in the loss of $27 trillion in assets, or 50% of global GDP, including $4 trillion in losses by banks and other financial institutions. The decline in stock market value and home prices was greater in 2008 than during the Great Recession (123).
• The 1929 recession transformed into the Great Recession because of a collapse of international economic cooperation. Closing the global economy increased the severity of the 1929 financial crisis (123-124). 
• The appropriate response to a global financial crisis is to increase global liquidity through long-term counter-cyclical loans and maintaining open global goods markets (135).
• The Great Recession was exacerbated by the failure of international economic cooperation. This is shown in the failure of the international community to help the Austrian government after the collapse of CreditAnstalt in 1931, which then led to a series of bank failures across Europe and the USA, and again in the failure of the 1933 London Conference (157).
• This did not happen during the 2008 recession, as the global economy remained open and cooperative even during the most intense phase of the crisis (124).
• Despite an initial increase in non-tariff trade barriers and accusations of dumping goods on international markets, this quickly receded and were never really high. Moreover, protectionist trade barriers were concentrated in countries like Russia and Argentina that already had high levels of protectionism (135-137).
• The WTO dispute resolution mechanism assured that protectionism remained at fairly low levels during the crisis by preventing retaliation and encouraging obedience by the major economic powers of the USA, China, and Europe (137).
• From the beginning of the Great Recession in 2007, central banks coordinated among themselves to engage in counter-cyclical lending, engaging in currency swaps, coordinating their interest rate cuts, and buying debts to increase liquidity. This cooperation also extended to international organizations, with the G20 tripling IMF reserves in 2009 and pledging more than $430 billion to aid the Eurozone in 2012, and the World Bank expanding its lending (137-140).
• Even countries that opposed these measures, like Germany, still participated in financial stimulus programs under international pressure, demonstrating the degree to which the response to the 2008 recession was globally cooperative (140).
• Prior to the 2008 financial crisis, there was a growing concern among elites in the robustness of international institutions, particularly fears that the global economic system would balkanize into closed regional markets. This was also reflected in declining public trust in international institutions (125-126).
• The dysfunction of international institutions was reflected in the inability of the IMF to get China to discuss issues regarding exchange rates, the unwillingness of Europeans to discuss finances within the Eurozone with the IMF, the failure of the Basel Committee to prevent poor banking practices, the failure to incorporate the BRIC into G8 discussions, the stagnation of the Doha Round of WTO negotiations (126), the failure of the Copenhagen climate summit, protectionist measures among G20 members, and 'currency wars' between the great powers (129).
• Anger and despair at global economic governance has not disappeared since the 2008 recession, but intensified in its aftermath. Public opinion favors more robust international institutions to regulate finance, and many elites have criticized economic governance during the crisis as fractured, gridlocked, and misguided. There have been increased worries that a split between developed and developing countries, as well as the general lack of global leadership, will result in a breakdown of the liberal international economic order (126-128).
• The recovery from the Great Recession should be compared to the Great Depression, which was another global financial crisis. Despite the initial decline in global trade and economic output being more severe in 2008 than in 1929, the economy has rebounded from the Great Recession much more quickly, returning to growth within 4 years, whereas in 1933 global GDP was still below pre-crisis levels (130-131).
• Growth following the Great Recession also continues to reduce poverty, as rates of extreme poverty continue to lower at levels similar to before the 2008 crash. This is largely due to the continued access of poor countries to global markets (131).
• Trade flows and cross-border capital flows have also rebounded following the Great Recession. Trade flows quickly resumed to pre-crisis levels and have since grown, same with capital flows. Moreover, capital flows have taken the same patterns as prior to the crisis, manifesting largely in direct investment in and remittances to developing countries. International bank loans have also rapidly returned to pre-crisis levels (131-134).
• There were expectations that the 2008 financial crisis would trigger global disruption and violence, particularly in the Middle East or civil conflict in North America. However, there have been no major flareups of domestic repression or civil violence following the 2008 recession and military expenditures have actually decreased due to budgetary pressure (134).
• In the aftermath of the 2008 financial crisis, new regulations were created for banking and investment. The IMF demanded new rules regarding transparency in sovereign wealth funds, stipulated in the Santiago Principles, which has since lowered barriers to these funds (140-141). The Basel Committee has also updated its banking standards, which were approved by the G20 at the 2012 Seoul Summit, to demand more liquidity and greater reserves, as well as to correct previous loopholes in calculating acceptable levels of leverage (141).
• The G20 replaced the G8 as the focal point for the response to the Great Recession once its crucial phase began in 2008, being official designated as such during the 2009 Pittsburg Summit. Despite squabbling over currency exchange rates, trends indicate overall compliance within the group and steadily lowering levels of exchange rate volatility (142).
• The G20 has emerged as a generally effective and legitimate forum for resolving economic disputes between major powers, being recognized as such by President Barack Obama during disputes over Chinese currency depreciation in 2010 (143)
• Many international organizations increased their powers as a consequence of the Great Recession. The balance of power also shifted within these organizations, with developing countries now playing a much larger role in decision-making and determining leadership (145). In the IMF, a reform of quota distribution was approved in 2011, greatly increasing the voting power of the BRIC, especially China (144). Similar reforms in the World Bank Group also increased the voting power of developing countries (144-145).
• A number of groups that were previously dominated by G8 countries expanded their membership in the aftermath of the Great Recession: the Basel Committee was expanded to include G20 members; the Financial Stability Board was created to monitor global financial regulation; the Committee of the Global Financial System grew to 22 members, including India, Brazil, and China; the Financial Action Task Force on Money Laundering admitted South Korea, China, and India as members (143-144).
• The policies adopted by these organizations, particularly the IMF and World Bank, have also changed to better reflect the priorities and perspectives of developing countries. This is shown by a limited endorsement of capital controls by the IMF in November 2012 and a shift toward more robust measures of development at the World Bank through the appointment of Jim Yong Kim, a doctor and public health specialist, as president (145).
• Despite the failure of the Doha Round and the very limited progress at the Bali Round, the WTO has continued to grow, admitting 7 new members, including Russia. Other smaller trade liberalization talks, under the WTO aegis, have progressed since 2007 and the number of free trade agreements has expanded. Moreover, the WTO has continually prevented the rise of protectionist measures (145-147).
• The despite the relatively robust recovery to the Great Recession, public perceptions of the effectiveness of the response to the crisis are negative because this recovery has not been nearly as strong in advanced industrial countries, which now tend to be much more negative about the response to the crisis and the state of global economic governance (148-149).
• The highly negative perceptions in developed states in Japan, the USA, and Europe reflect domestic politics more than international economic governance. Japan has had to worry about 20 years of economic slowdown, the USA has been in domestic political turmoil, and Europe itself, particularly through austerity policies, is largely responsible for the severity of the Euro Crisis (149-150).
• The IMF has actually been fairly critical of the European response to the Euro Crisis, but many of its suggestions have been ignored by the EU. European governments appear unwilling to accept these criticisms unless IMF advice is supported by a market response (150).
• The present system of international economic governance also suffers from nostalgia for the Bretton Woods system and more robust economic governance. This ignores the many weaknesses of the Bretton Woods regime, however, including lacking an equivalent in strength to the WTO, the ineffectiveness of the IMF, and the final collapse of the system under the pressure of trade imbalances (150-151).
• The conflicts that dominated global economics following President Nixon's termination of the  Bretton Woods system -- fights over trade imbalances between the USA on the one hand and Japan and West Germany on the other -- were only partially resolved. The 1985 Plaza Accords, that resolved the trade imbalance between Japan and the USA, also kickstarted an asset bubble in Japan. And the creation of the euro was marred by early noncompliance with the accompanying Stability and Growth Pact (151-152). 
• The general failure of global economic governance in all previous periods means that the dysfunction in the early 2000s is not abnormal and it makes the level of coordination and cooperation shown in the response to the Great Recession fairly remarkable (152).
• Cooperation between major economic powers occurred during the 2008 financial crisis, but not the Great Depression, OPEC oil crisis, the collapse of the Bretton Woods system, or the European currency crises of the early 1990s, because of the strong leadership role still played by the US and its commitment in 2008 to maintaining liquidity in capital markets, pursuing global financial regulation, and retaining open capital and goods markets (152-154).
• Another major factor is that, whereas economists were split on how to respond to the Great Depression and faith in previous economic theories collapsed, belief in the Washington Consensus has survived the 2008 recession and influenced the reactions of all major countries, including China, to the Great Recession and its aftermath. Coordination has been easier because all major economies agree on the principles of free trade and the maintenance of the Jamaica system (154-156).
• Some have proposed that globalization has made all major economies prefer the continuation of open global markets, thus explaining the consensus to preserve open markets in 2008. However, this ignores the objections of major countries, like Germany, to the stimulus response to the crisis. Moreover, this does not explain other reactions, such as European acquiesce to the reduction of their voting power in the IMF and World Bank or China allowing limited currency appreciation (153).