Urgent need for global financial system reform
Kanaga RAJA
The financial crisis with a “made in USA” label on it is now
affecting developing countries worldwide including those that had
undertaken good financial market regulation as well as good monetary
macroeconomic policies, said Nobel Laureate Prof. Joseph Stiglitz.
“In fact, many of the developing-country central banks have policies
that are much more prudent and [have] much better regulation than some
of the advanced industrial countries that are currently facing a
problem,” Stiglitz told a media briefing at the Inter-Parliamentary
Union’s office in Geneva.
His personal view is that some of the advanced industrial countries
should go to the developing countries and study what they did to learn
what good regulation entails.
Noting that there are many distortions to the international trade
regime such as tariffs and subsidies, Stiglitz said that subsidies
provided by the industrial countries to their companies and financial
institutions “have totally destroyed the level playing field” for years
to come.
It means that companies and financial firms in developed countries
can undertake risks, knowing that if there is a problem, they may be
bailed out.
Speaking briefly on the WTO Doha Round of trade negotiations,
Stiglitz said that while it’s not likely that the Doha Round “will reach
completion quickly” particularly given the current disturbance to the
free market, the developed countries can help the poorest countries by
unilaterally opening up their markets to the developing countries.
Stiglitz, who is also a professor of economics at Columbia
University, was in Geneva attending meetings of the Commission of
Experts on Reforms of the International Monetary and Financial System,
which he chairs.
The Commission was formed last November by the President of the UN
General Assembly Father Miguel D’Escoto Brockmann of Nicaragua.
At the media briefing on 11 March, Stiglitz explained that the
Commission of Experts was set up to look at the impact of the financial
crisis on developing countries in order to assess the kinds of reforms
needed in the global financial system.
The recommendations that the Commission is likely to come up with
will serve as a preparation for the discussions that are going on that
will lead to the UN high-level conference which will be held at the
United Nations headquarters in New York at the beginning of June.
He said that the Commission viewed itself as having two roles helping
to provide some of the input and thinking into that UN process, and also
coming up with a longer document that hopefully will have some impact on
the global debate on the restructuring of the global financial system.
- Third World Network
Features
|
