Sogang University, Seoul 8 November 2010 Bretton Woods Moment Lost? Financial Reform Proposals by the Commission of Experts of the 63rd President of the UN General Assembly Sogang University, Seoul 8 November 2010

Crisis should lead to reform A crisis foretold International financial architecture: non-system? Ideology: deregulation, self-regulation, inadequate and inappropriate regulation Financial globalization: growth, stability? Capital account liberalization vs IMF Article 6 Policy: market-led? Pro- or counter-cyclical? Finance’s inflation fetish? Public sector deficit? Reserve currency  Unsustainable global imbalances International cooperation: G7  G20, UN?

Lost Bretton Woods moment? Bretton Woods, 1944: United Nations conference on monetary + financial affairs 15 years after 1929 Depression Middle of WW2 US initiative vs UK Treasury stance 44 countries (28 developing countries; 19 LA) UN system: IMF, IBRD, ITO Clear emphasis on sustaining growth, job creation, post-war reconstruction, post- colonial development, not just monetary + financial stability

Reform initiatives UN PGA (Stiglitz) Commission of Experts June 2009 summit on crisis + impact on developing countries G7  G20: more inclusive? legitimate? crisis-management, but not inclusive, developmental, equitable Financial Stability Forum  F S Board Pittsburgh Summit promise: Finance Ministers’ and Deputies’ expert and working groups

G20 achievements largely development-friendly Coordinate monetary, fiscal stimuli Sustain recovery efforts Limit protectionism Strengthen IMF, governance reform Strong, sustained, balanced, resilient growth framework Financial safety nets: FCL, PCL Financial inclusion

G20 success double-edged Ensure effective + coherent financial regulation (Basel 3, FSB) - FSB strengthening - Basel 3 capital requirements - shadow banking? MAP: mutual surveillance outside IMF Limit executive remuneration no agreement G20 institutionalizaton will marginalize or capture inclusive multilateralism (BWIs, UN)

Crisis roots International financial architecture: non-system since 1971 end of BW Lack of reserve currency system  unsustainable global imbalances Financial deregulation - deregulation, self-regulation - inadequate + inappropriate regulation Capital account liberalization

Broader reform agenda Ensure macro-financial stability with counter- cyclical macroeconomic policies + prudential risk management, including capital controls Monterrey policy coherence: Align IMF, WB with UN development agenda, IADGs UN: universal, legitimate, but not allowed to lead comprehensive, systemic reform process

Financing for development Domestic resource mobilization, including taxation Trade: Developmental Round Aid effectiveness Debt workouts  sustainability Access to international capital Systemic issues, incl. governance

FfD priorities Sufficient financing for development Coherent, enabling development friendly international policy environment Supportive international frameworks for trade, taxation, technology, debt resolution, climate change mitigation + adaptation for sustainable development

G20 FfD initiatives? Better mobilize private capital for infrastructure financing (EIB, bonds) (1) Framework (for Strong, Sustainable, Balanced Economic Growth) + (2) financial safety nets should include: consistently counter-cyclical policies, institutions, instruments, mechanisms Innovative financing for development? SDR emissions: liquidity, counter-cyclical, developmental?

Stiglitz Commission: New institutions Global Economic Coordination Council democratically representative G-20/L27 include UN system chief executives and Heads of Government coordinate international adjustment of imbalances International Expert Panel (model: IPCC) New Financing Facility New International Reserve Currency

Other proposed institutions International Debt Restructuring Tribunal Independent of IMF (unlike DRM proposal) Replace World Bank’s ICSID Foreign Debt Commission Intergovernmental Commission on Tax Cooperation (for resource mobilization) Multilateral Regulations International Tax Compact Global Financial Authority New Policy Surveillance Mechanism Independent of IMF Support national capital account management

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