G-20 response to financial crisis - money, money, money
All eyes were on the Group of 20 (G-20) this month as they met in London and announced a whopping $1.1 trillion to stimulate the global economy. The impressive figure and various commitments on tax havens, regulation, and boosting the IMF’s lending capacity (See “Just the Facts”) grabbed the headlines and saw stock markets respond positively the next day.
Capital flight and financial regulation
G-20 response to financial crisis - money, money, money
When US financial powerhouse Lehman Brothers collapsed last fall, the world saw the start of an unprecedented collapse in global stock markets, bringing with it the loss of billions of dollars of investment around the world and severely shaking the foundations of the international banking system. Gloomy economic forecasts, a loss of investor confidence, and mass capital flight have all contributed to the worsening of the current global financial crisis. A decade ago, a similar situation unfolded in East Asia when market speculation sparked investors to pull out billions of dollars of capital, inflating debt and destabilizing markets in the region. In response, the Chiang Mai Initiative emerged in an effort to protect Asian markets from future crises. But has it stood up to today’s global economic collapse? And is an Asian Monetary Fund on the horizon? This brief explores these, and other, issues.
Rt. Hon. Stephen Harper
Prime Minister of Canada
Office of the Prime Minister
80 Wellington Street
Ottawa, ON K1A 0A2
Re: Forthcoming G-20 meeting on the global financial crisis
Dear Prime Minister:
As you head to London next week for the second Group of Twenty (G-20) meeting, we are writing to urge Canadian leadership on four key issues related to the impact of the financial crisis on poor countries that we feel have been neglected up until now.
To date, your government has focused primarily on addressing the immediate fallout of the financial crisis, and has taken steps to restore the flow of credit and consumer confidence, boost spending, and create jobs. Canada has also encouraged G-20 countries to avoid protectionist measures that will only exacerbate the current climate.
Europe looking to lead on response to financial crisis
A warning against US (and Canadian?) opposition to a new international architecture of institutions and tighter regulations to manage a more “moral” form of global capitalism, a flexible Economic Council within the United Nations, and an economic sustainability charter that establishes the rules for global financial governance, were three of the key themes raised by German Chancellor Angela Merckel and French President Sarkozy at a high-level symposium hosted by Sarkozy and former British Prime Minister Tony Blair in Paris this month.
Financial crisis a boon for ECAs
While hefty public bailouts of the financial and auto industries have stimulated debate on the role of governments in commercial markets, one form of government subsidy has flown beneath the proverbial radar: export credit. Confronted by an increasingly dire financial crisis, Western governments are using their export credit agencies (ECAs) to boost liquidity and rescue faltering industries. At an extraordinary World Trade Organization meeting last month, participating governments reported a 30% increase in ECA business over the previous 12 months. The WTO called for even greater reliance on public credit to lessen the burden on commercial banks. Shortly afterwards, the OECD announced an agreement with non-members, including Russia and Brazil, to provide markets with publicly-sourced export credit.
G-20 Summit – financial response to a development crisis
With the global economy continuing its downward spiral, ambitions for the first Group of 20 (G-20) “Summit on Financial Markets and the World Economy” in Washington were sky high. In contrast, expectations in terms of concrete outcomes, with diverging opinions on key issues going into the meeting and a pretender at the throne in DC, couldn’t have been lower.
For pdf, click here.
The Hon. David Emerson
Minister of Foreign Affairs
Foreign Affairs and International Trade Canada
125 Sussex Drive
Ottawa, ON K1A OG2
October 10, 2008
Re.: Canadian priorities leading up to the Doha Financing for Development Review.
Dear Minister Emerson:
The Halifax Initiative would like to thank John Foster, North-South Institute, for his help in developing these FAQs
Revised November 2007
Fallout at Bank and Fund meetings in Singapore
The Work Bank and International Monetary Fund’s (IMF) fall meeting in Singapore from September 19-20, were mired in controversy this year. In the days prior to the meeting, it became clear that Singapore intended to ban numerous accredited organizations from entering the country. In response, groups unilaterally boycotted the official program. Organizers of the parallel International Peoples Forum in Batam, Indonesia, reported that 54 individuals from 17 groups were detained at the Singapore airport without explanation, and subjected to custodial interrogation and deportation. Many groups felt that, with IMF reform and good governance and corruption on the agenda, the choice of Singapore as the venue for the meetings underscored the superficial nature of the Bank and Fund reform agenda.
G7 Response to Financial Crises – Another Band-Aid
The frequent financial crises of recent years has exposed the systemic instability of global finance and resulted in devastating impacts on human development. Financial liberalization has meant that governments have lost their ability to control the global flow of capital, thereby surrendering monetary and economic policy sovereignty to investment firms and large banks.
These financial crises revealed the degree to which financial markets are under-governed in the global economy. An enormous discrepancy exists between an increasingly sophisticated international financial world and the lack of proper institutional frameworks to regulate it at the national and multilateral levels. The inevitability of future crises makes the re-regulation of capital a global imperative.