Challenges of the financial crisis for the world economic institutions
- Author(s):
- Parliamentary Assembly
- Origin
- Assembly
debate on 23 June 2009 (21st Sitting) (see Doc. 11944, report of the Committee on Economic Affairs and Development,
rapporteur: Mr Sasi). Text adopted by
the Assembly on 23 June 2009 (21st Sitting).
1. The Parliamentary
Assembly expresses its solidarity with governments and parliaments
in Europe and around the world that are struggling to counter the
effects of one of the worst financial and economic crises for decades,
with its severe negative impact on growth, trade, investment and
employment across the globe and untold social and human consequences.
Among other things, the crisis has focused renewed and more urgent attention
on the role and relevance of the world’s economic and financial
institutions and their governance – already under close scrutiny
before the crisis – not least in order to assess how far their mandates
allow them effectively to help overcome the crisis and the role
they should play in preventing such turmoil in the future.
2. In this context the Assembly reaffirms its
Resolution 1651 (2009) on the consequences of the global financial crisis,
which set out principles that should be taken into account in seeking
to soften and come out of the recession and reform the financial
system, including the need to safeguard the social and economic
rights of citizens. In this context, the Assembly encourages the
International Labour Organization (ILO) to intensify its work to
alleviate the often dramatic cost of the crisis in human terms.
The Assembly also strongly reaffirms the right of every citizen
to be fully and accurately informed about markets and financial
products in a transparent manner, so as to allow optimum management
of risk to their savings. The availability of complete and precise
information to consumers is essential to any well-functioning economy.
3. The Assembly welcomes the progress already made in reforming
the international financial architecture under the aegis of the
Group of 20 major industrial and emerging countries (G20), whose
leaders met in Washington DC on 15 November 2008 and in London on
2 April 2009 and will meet again before the end of 2009 to review
further progress. The fact that the G20, a body more representative
of the global economy than the G7 or G8, is spearheading these efforts
marks in itself a major change in international financial governance and
ensures that its deliberations will carry weight. Its membership
includes the key emerging economies and represents some 90% of world
GNP, 80% of world trade and two thirds of the world’s population.
4. The Assembly considers that the main challenge facing international
financial institutions, such as the International Monetary Fund
(IMF), and multilateral development banks, such as the World Bank,
as well as the governments that fund them, is to ensure adequate
global liquidity and stability in order to restore growth and hence
employment. In addition, international financial institutions must
play a major part in restoring confidence in the international financial
system by contributing to the enhancement of its regulatory framework. In
this context the Assembly welcomes the work of the Financial Stability
Forum and its transformation into an enlarged and strengthened Financial
Stability Board. The Assembly considers that putting the international banking
system back on track must be a top priority. For their part, the
multilateral development banks must step up their efforts to ensure
that the least developed countries do not suffer disproportionately
as a result of the crisis.
5. The Assembly expresses particular satisfaction that the G20
has assigned additional resources to the IMF and the multilateral
development banks to cope with the demands arising from the crisis.
The resources of the IMF are to triple to US$750 billion, and it
has been given the authority to issue US$250 billion in new special
drawing rights. The multilateral development banks have been ensured
adequate capital to increase their lending by at least US$100 billion,
including to low-income countries. Nevertheless, the Assembly expresses
concern that much of this funding remains outstanding. It therefore
calls on those governments of the G20 and those of other Council
of Europe member states that have not yet contributed to ensure
that the international financial institutions and multilateral development
banks are guaranteed sufficient funds to perform the tasks they
must assume.
6. The Assembly takes note of the inefficiency of the existing
financial market regulators, which is one of the reasons for the
global crisis. The possibility of the establishment of a global
regulator across financial markets should be studied for the prevention
of such crises in the future.
7. The economic crisis shows that the role of nation states in
a globalised world is limited. For this reason, international economic
and financial co-operation must be strengthened. There are global
systemic problems in the financial structures and these structures
must therefore be changed. The supervision of rating systems must
be developed. The international reserve system based on national
currencies must be reviewed. The need for an international bankruptcy
court should also be considered.
8. The Assembly notes with alarm that, although the Organisation
for Economic Co-operation and Development (OECD) has reported that
official development assistance reached its highest level ever in
2008, many donor countries are still not fulfilling the promises
they made at the G8 Summit in Gleneagles, Scotland, in 2005. Moreover,
the OECD expects that remittances from migrant workers, a major
source of income for the developing countries, will drop significantly
in 2009.
9. The Assembly welcomes the loans arranged by the IMF with countries
severely hit by the crisis, including several Council of Europe
member states. It urges all countries to follow policies of fiscal
responsibility and calls on the IMF to provide early preventive
advice to countries likely to experience difficulties rather than
being forced to impose harsh conditions on loans to them when it
is too late to do otherwise. In this context, the Assembly welcomes
the steps taken by the IMF to introduce more flexible loans, including
higher limits, increased concessional lending for low-income countries,
less stringent conditions, improved standby arrangements and the
new flexible credit line designed to insure countries with basically
sound economies against sudden capital outflows.
10. The Assembly welcomes the recent decision of the World Bank
to temporarily stop using the “Employing Workers Indicator” (EWI)
of its publication with the highest circulation, Doing Business, and to convene a working
group to revise the EWI and to establish a new worker protection
indicator, as well as to offer broader ideas on labour market and
employment protection issues – with a view to creating regulations
that help build robust jobs with adequate protection that can withstand
future crises.
11. The Assembly welcomes the steps already taken by the Bretton
Woods institutions to improve their governance, legitimacy, credibility
and accountability, not least by providing a greater voice for the
emerging and developing countries, but underlines that in order
to carry out their new responsibilities effectively, they should
speed up the implementation of reforms going forward.
12. Conscious that fair and balanced international trade is a
major contributor to world economic growth and also employment,
and that such trade is expected to fall by 9% in 2009, the Assembly
supports the G20 in its call to reject protectionist measures and
welcomes its decision to ensure availability of at least US$250
billion over the next two years to support trade finance through
export credit and investment agencies and through the multilateral
development banks. The Assembly reiterates its appeal to the members
of the World Trade Organization (WTO) to make every effort to conclude
the Doha Round of trade negotiations, in a spirit of constructive
solidarity especially with low-income countries. The Assembly also
calls on the WTO to examine ways to make the negotiating framework
more flexible.
13. The Assembly welcomes the work of the OECD to address the
impact of the crisis, in particular in the context of the internationally
agreed tax standard, and the regulation of the international financial
system, and looks forward to discussing the OECD’s contribution
in more detail on the occasion of its annual debate on the activities
of this organisation.
14. The Assembly calls on the parliaments of the Council of Europe
member states that vote for the national budgetary contributions
necessary for the funding of the international financial and economic
institutions to exercise close vigilance over every aspect of their
activities.
