Financialisation of the Peripheral State: the Role of Currency and Sovereign Debt Hierarchies

Abstract

This paper explores the concept and manifestations of state financialization, emphasizing its particularities in peripheral economies. While the state actively fosters financial market development and relies on it for economic policy execution, it is also disciplined by these markets, reinforcing neoliberal constraints that limit policy autonomy and expand financial power. In peripheral states, financialization is deeply shaped by currency and sovereign debt international hierarchies. This mutual dependence creates a contradiction: financial deepening provides risk management tools but simultaneously strengthens global financial hierarchies, to the detriment of peripheral countries.