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Responses to the financial crisis

Responses to the financial crisis. Two responses: The Group of Twenty (G-20) The Stiglitz Commission and the UN Summit on the World Financial and Economic Crisis and its impact on Development Contextualize each Provide some brief analysis Differences in the approach. The G-20 response.

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Responses to the financial crisis

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  1. Responses to the financial crisis • Two responses: • The Group of Twenty (G-20) • The Stiglitz Commission and the UN Summit on the World Financial and Economic Crisis and its impact on Development • Contextualize each • Provide some brief analysis • Differences in the approach

  2. The G-20 response • Focus: restoring confidence, lending, regulation, reforms to forestall future crises, promote trade • 1.1 trillion • 750 billion to the IMF (new resources; SDRs) • 250 billion for trade finance; two years (IFC; ECAs) • 100 billion for MDBs ($300 billion over three years) • Enhance role for IMF in independent surveillance and advanced-warning system for risks (with FSB) • Reformed lending and conditionality

  3. The G-20 response (continued) • Strengthened regulation (stronger systems and cooperation) • IMF and WB governance reforms • Action on tax havens (OECD list) • Hedge funds, derivates, credit rating agencies self-police against code • Ambitious and balanced conclusion of Doha • Reaffirmed commitments to MDGs and aid • Support for Copenhagen

  4. Money, money, money (the communiqué is funny) • “Development is secondary” • 1.1 trillion vanishing act  50 billion LICs • (c.f. 5 trillion) • 250 bn - 19 bn (SDR); mostly rich countries • 6 bn gold sales (already planned; admin) • 4 bn concessional lending • 6 bn MDBs • 12 bn trade finance • 2 bn earlier SDR

  5. Money, money, money (the communiqué is funny) (continued) • Enhanced role IMF and FSB – legitimacy • Reformed lending – double standard (TWN); WB vulnerability fund; IMF social protection • Regulation – Vague “systematically important” • Governance – Been there, done that • Tax havens – List; falls short • “Shadow banking” – self policing, incomplete • Doha – financial liberalization; protectionism • MDGs, Copenhagen, Aid?

  6. G-20 – Some figures • 1.1 trillion; 5 trillion globally • LICs – 50 billion • WFP – 250 billion ? • WB CIF – 6 billion • WB Vulnerability Fund – 200 mn • Aid – 117 billion (2008) • MDGs – 60-70 billion additional • Tax dodging – 500 - 700 billion

  7. Stiglitz Commission and UN Summit • Summit – FfD; causes, impact, reform of system and institutions; highest level; outcome • Commission – last fall; members; key recommendations: • Industrialized countries 1% of stimulus to developing countries • New democratic credit facility for channelling resources • No procyclical policies, encouraged anti-cyclical • New SDRs; support for regional (CMI) • New reserve system (offset surplus and deficit; accumulation)

  8. Stiglitz Commission and UN Summit (continued) • Tools to reduce risk (regulations, price interventions, capital controls) • Innovative finance • Trade regime that promotes growth • Short-term Advisory: Global Economic Coordination Council • Fundamental governance reform of WB and IMF; double majority voting • Recommendations feed into UN Summit on June 1-3; draft outcome document coming.

  9. Responses to the Stiglitz Commission and UN Summit • “ ”, US • “ ”, Europe • “ ”, G-20 • “ ”, Canada • “Just a place for radicals like Nicaragua and Iran to voice their concerns”

  10. What to do? • Crisis of multilateralism – support and feed into UN process • Work with partners in Africa to raise awareness and support for UN process – both among CSOs and Gov’t • Work with HI to raise awareness in Canada • Letter to Harper on themes of UK groups – ACF signed; • Meetings and more pressure with gov’t and MPs • Participate in the Summit process

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