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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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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


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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


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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


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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


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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?


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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


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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)


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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.


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    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”


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    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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