Rethinking the international financial system during a time of crisis

Introduction
On October 19 and 20, 2009, the Halifax Initiative held a conference, co-hosted by The North South Institute, the University of Ottawa and the School of International Development and Global Studies (SIDGS), entitled "What’s Missing in the Response to the Global Financial Crisis?" The meeting brought together experts from a range of backgrounds to analyze the challenges facing the global economy, discuss the ways in which the international community has responded to the current financial crisis, and identify shortcomings in these responses.

The current crisis has not only exposed long-standing and deep-rooted fragilities and imbalances in the global financial system, but it has also led to an intensification of efforts to reform and strengthen the existing international financial architecture.

Since September 2008, when the financial crisis took on global dimensions, the ‘Group of 20’ (G-20) has met three times at the level of Heads of State, producing and implementing a long list of policy commitments in the areas of global governance, emergency and trade finance, macroeconomic surveillance, regulation of the banking sector and reforms to address secrecy jurisdictions (also known as “tax havens”). These efforts have addressed some of the immediate impacts of the financial crisis; but the speed, range and depth of the impacts suggest that the international financial system requires additional and profound changes to ensure a stable and sustainable global economy as we move into the next decade of the 21st century.

To achieve this, Canada faces three principal challenges:

• First, the government must ensure that actions taken are commensurate with the scale, depth and urgency of the crisis and its impacts. Given the interconnected and interdependent nature of the global economy, addressing this and future crises will require changes at both the national and international levels;
• Second, the changes must be ambitious enough to prevent the outbreak of a similar crisis in the future;
• Third, the government must work actively to maintain, and in some cases generate, the political momentum needed to achieve such far-reaching changes.

This policy paper is not a synthesis of the event itself. Rather it builds on key findings from the October conference and a range of views that have emerged over the past year. It provides recommendations for decision-makers on eight different issues related to the international financial system and its institutions ahead of the Group of Eight (G-8) and G-20 meetings in June 2010 in Huntsville and Toronto, Canada.