By the mid-1990s, both the theoretical understanding of finance and the actual nature of international and domestic financial systems had changed radically from those at the end of World War II. In that context, this chapter looks at the changing nature of the international financial architecture in response to those changes.

This chapter addresses five main areas. Section I presents an overview of the Bretton Woods international economic system and its development to the early 1990s – at the time of the Mexican financial crisis. It also discusses the changing roles of the Bretton Woods institutions in the context of financial globalization and the series of financial crises over the past decade. Section II looks at changes to the international financial architecture arising from events of the 1990s – including the new role of international financial standards, the only element of the international financial architecture which (along with the related Financial Stability Forum) can truly be classified as new. Section III discusses the specific aspect of the international financial architecture of most concern to this volume: the system of international standards and standard setting. However, while an important development, to be effective these standards must be implemented by individual economies – an issue discussed throughout the following chapters. Section IV therefore discusses international efforts to monitor and support the domestic process of implementation.