Bretton Woods Moment Lost? UN Commission on Reforms of the International Monetary and Financial System Colombo 22 November

2 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? Finances 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

5 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

7 Finance reform priorities Prudential risk management, including capital controls (now IMF OK) Counter-cyclical: limit pro-cyclicality Finance growth (output, employment) Development finance, e.g. crucial for investment + technology policies Inclusive finance

Financing for development Domestic resource mobilization, including taxation Trade: Developmental Round Aid effectiveness Debt workouts sustainability Access to international capital Systemic issues, incl. governance 8

Development 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 9

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 Banks 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

12 Thank you Please visit the following websites: UN-DESA Policy briefs Research papers Other documents