Constraining Financialization: Earmarking Foreign Reserves against Riskier Investment

• In Event: 40860 - Section on Economic Sociology Roundtables
  In Refereed Roundtable (60 minute): Table 5. Finance

Abstract

While studies on financialization have expanded, they have rarely explored negative cases. Specifically, the emerging literature on the financialization of state has underexamined the determinants of constrained financialization. This article addresses this gap by analyzing the constrained financialization of foreign exchange reserve management in South Korea, using a wide range of original materials from South Korea, the United States, and the International Monetary Fund. Drawing on scholarship on the social meaning of money and financialization, it argues that the Bank of Korea (BOK), financial experts, and lawmakers successfully constrained risky investments by earmarking foreign reserves as a national emergency fund for crisis responses. Extending Zelizer’s dictum that “not all dollars are equal,” it asserts that not all dollars are equally financialized, as social designations attached to monies either constrain or accelerate financialization. By integrating the social meaning of money with macro-level financialization, the article offers novel contributions to financialization studies.

Author

• Joonsik (Joon) Kim, University of Toronto