Apparently Mr. Martin deplores the IMF, Financial Stability Forum, and BIS because they aren’t inclusive enough – meaning they don’t have buy-in from, and control over, the economies of every nation yet. If the problem is inherent in the centralization of these agencies, why has the suggestion of getting rid of them never crossed the lips of a single world leader? But decentralization of power will not be on the agenda in the forseeable future – what we are witnessing today is the death rattle of the independent nation-state to make way for regionalized trading blocs ruled by an economic elite.
Heather Scoffield, The Globe and Mail
September 29, 2008
Former prime minister warns the next financial crisis could rise in an emerging marketÃƒâ€šÃ‚Â
OTTAWA – Emerging market governments need to be fully included in international discussions to resolve the deepening U.S. financial crisis, says former prime minister Paul Martin.
The global reach of the turmoil – which started with subprime mortgages in the United States but has caused banks in Europe to fail and credit conditions around the world to deteriorate – makes this crisis far larger than other financial calamities, Mr. Martin was scheduled to say today in a speech in Toronto.
“Today’s global concerns require a level of international co-ordination that is fundamentally different from any other period of history, and the creation of the structures that will oversee the economy of the 21st century has been delayed too long,” says the text of his speech to a Financial Times and Canada 2020 conference on the future of the global economy.
Too much of the discussion about crisis resolution takes place within organizations that don’t give much room to the voices of some of the world’s largest emerging economies, he said. He singled out the Group of Seven, the International Monetary Fund and even the Financial Stability Forum.
That’s dangerous, he says, because the next financial crisis may very well be born in one of those countries.
“The lesson of subprime is – now that capital markets are truly seamless the world over, and that there will be not one or two, but for the first time in our lives, five or six giant economies – what is it the world must do to prevent, or at least mitigate, the consequences of the crises they will inevitably present us with?” Mr. Martin asks.
Mr. Martin was Canada’s finance minister in 1997 when the Asian currency crisis spilled over, destabilizing currencies around the world and driving down commodities. He was at the forefront of setting up the Group of 20 finance ministers and central bankers at the time, in order to get key emerging markets to the table in preventing future financial crises.
“The G20 was an important step forward. But let us not kid ourselves, it is not enough,” Mr. Martin says. “The fact is, virtually all of the institutions that we have set up to deal with the gaps in the world’s economic architecture have been frozen in time for too long.”
While the Financial Stability Forum – set up after the Asian financial crisis, and linked to the Bank of International Settlements – has been a key venue for resolution of the subprime crisis, the G20 has also been active in bringing central bankers together for frequent emergency conference calls.
But the G20 has clearly not been as effective in crisis resolution as Mr. Martin had envisioned a decade ago.
“The world’s ability to deal with all of this co-operatively and decisively will only happen if the emerging economies are given their rightful place now in the Financial Stability Forum, the IMF, the [Organization for Economic Co-operation and Development] and other institutions of global economic governance,” he says.
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