Minilateralism and informality in international monetary cooperation

Abstract

The 1970s marked the beginnings of a transition to a variegated system of international monetary governance that featured a mixture of multilateral and minilateral forums with both formal and informal characteristics. The emergence of two new forums for international cooperation – the Group of Five (G5) and Group of Seven (G7) – alongside the legacy organizations of the Bretton Woods conference represented a novel and unexpected development. With their emphases on minilateralism and informality, the two new forums stood in stark contrast to the multilateral and formal International Monetary Fund, which had been the focal organization in the international monetary system since the 1940s. The new forums were not intended to be durable innovations and yet they became quickly institutionalized. This article examines the contributions of agency-centered, structural, and institutional theories to fuller understandings of patterns of institutional innovation in international cooperation and, more specifically, to why the transition to a variegated international monetary system took place. Based on research in official and private archives, it concludes that informal minilateralism emerged incrementally through diplomatic practice in response to failures within the formal legacy organizations of the Bretton Woods system. It further argues that the new forums produced unanticipated feedback effects that enhanced support among member governments and contributed to the two forums becoming durable features of the international monetary system despite senior government officials originally having no such intentions.