June 11, 1999
To the leaders of the Group of Seven nations,
At next week's Summit in Cologne, you will be discussing new directions for public policy governing global markets in order to help prevent or mitigate future financial crises. Measures currently under discussion, including strengthened financial sector supervision, surveillance and transparency, while commendable if adopted, are insufficient to prevent future crises. Similar measures endorsed at your Summit in Halifax in1995 in the wake of the Mexican peso crisis, although not fully adopted, were unable to prevent or even anticipate the South East Asian crash of 1997. Clearly, bolder measures are required.
We, the undersigned, call on you to establish an International Commission of Inquiry on the system of regulation which is required to govern international financial markets. The Commission would address, among other issues, the feasibility, desirability and implementation of measures to control speculative capital flows. Many of you have called for the control of currency speculation, yet to date, it is strikingly absent from the "new financial architecture" debate. Domestic and international measures to reduce volatile capital flows must be integral to any discussions of financial crisis prevention. An open debate on currency controls is overdue.
We do not believe the place for these discussions is the Financial Stability Forum, as currently constituted, for it is insufficiently broad-based, open and participatory to ensure a fair hearing of innovative proposals and Southern voices. Few nations have been spared the impact of the recent financial crisis, no nations must be excluded from efforts to find solutions.
The political constituency for these discussions is growing globally. In March, 1999, the Parliament of Canada passed a motion supporting the taxation of international financial transactions by a resounding 164-83 margin. Widespread public support was credited for the vote. In Brazil, a Parliamentary Front for the Tobin tax was created in May, 1999, with over one hundred MPs participating. Leading political figures in France, Germany, Finland, Belgium, the UK and the US have spoken in favour of domestic and international regulatory measures to reduce market volatility, stem capital flight during crises and generate revenue. Around the world, non-governmental organizations are mobilizing to build public support.
We recognize that many in the financial sector will strongly oppose any actions that would impede the unrestricted flow of capital. We further recognize that continued inaction on this issue is unacceptable to any nation concerned with protecting and increasing jobs and social security, ensuring the stability of currencies and maintaining economic productivity both domestically and internationally.
The world is at a critical juncture, when economic necessity aligns with human need. You have the opportunity to help begin the construction of a more democratic and equitable global economy, one that serves the needs and interests of all of its citizens. We urge your courage and your leadership in Cologne in establishing the International Commission of Inquiry.
Good Shepherd Social Justice Network
Congregation of the Sisters of the Good Shepherd
Centre pour l'Environnement et le Developpement
Network Institute for Global Democratisation (NIGD)
Forschungs- und Dokumentationszentrum Chile Lateinamerika (FDCL)
World Economy, Ecology & Development (WEED)
Consumer Unity & Trust Society,
CUTS Centre for International Trade, Economics & Environment,
Public Interest Research Group
APEC Monitor NGO Network
Global Civic Sharing
Rural Reconstruction Nepal -RRN
Labour Party Pakistan
Swiss Coalition of Development Organizations
Focus on the Global South
War on Want
Accounting for the Environment
Center for International Environmental Law
Institute Justice Team
Sisters of Mercy of the Americas
International Alliance for People's Movements
JustAct: Youth ACTion for Global JUSTice
Network for Environmental and Economic Responsibility of the United Church Christ
Rainforest Action Network
International South Group Network
Consumers International - Regional Office for Asia and the Pacific
Development Alternatives with Women for a New Era (DAWN)