Bretton WoodsMoment Lost?UN Commission on

Reforms of the International Monetary and Financial System

Colombo22 November 2011 1

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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

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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

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Development prioritiesSufficient 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

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Stiglitz Commission:New institutions

Global Economic Coordination Council

democratically representative G-20/L27include UN system chief executives and Heads of Governmentcoordinate international adjustment of imbalances

International Expert Panel (model: IPCC)New Financing FacilityNew 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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Thank you

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