Options for the Future
GRI’s recommendation for enhancing the management of global finance system includes proposals on:
- Enhanced disclosure (e.g. accounting standards);
- Global risk assessment and effective forms of interventions (e.g. global systemic risks and compelling responses; new roles of the Financial Stability Board);
- Speedier ways to create international liquidity (e.g. at the recommendation of the IMF Managing Director); and
- Restructuring the relationship between the G20 and the formal global governance system (e.g. G20 engagement with ECOSOC).
GRI’s detailed recommendations of finance and economic development matters are in GRI’s sub reports covering:
• Structural Matters
o Global Agenda Council on the International Monetary System
o Global Agenda Council on Systemic Financial Risk
o Global Agenda Council on Global Investment Flows
• Policy issues
o Global Agenda Councils on Economic Growth & Development
o Global Agenda Council on Poverty & Development Finance
o Global Agenda Council on Catastrophic Risks
o Global Agenda Council on Emerging Multinationals
It should be noted that GRI’s recommendation for an early warning system to spot the next systemic financial crisis is one of only two recommendations that suggests a command-control sanctioning provision. 1 It is also one of the few GRI’s economic recommendations that does not recommend a multi-stakeholder governance process.
There are contentious governance issues at almost all international financing institutions. At the IMF, the pressing governance issues include the method of selection of the Managing Director, the distribution of voting shares, and the principle of weighted voting by size of national contributions. At the World Bank, challenging governance issues include the method of selection of the Managing Director; the inconsistent use of social, environmental, and other standards; and the arrangement to establish conditionality for loans to developing countries. At the Financial Stability Board and the Bank for International Settlements, there is virtually no public consultation and only limited access to papers and documents. The credit rating institutions have been challenged on their oligopolistic control of credit standards and their lack of public accountability.
What the GRI didn’t address in this area is quite significant. In addition to its silence on fundamentally changing the governance of the financial institutions, Everybody’s Business did not to include recommendations on (a) what to do with systemically important financial institutions; (b) how to supervise or control of currency and commodity transactions; (c) taxes on international financial transactions and related innovative sources of funds; (d) credit default swaps or any other new financial instruments; (e) the disconnect between finance and productive capital; (f) public access to documents and decision-makers in these institutions; and (g) how to better contain the speed of transmission of a local or national financial crises.
The Readers' Guide welcomes commentary – critical or otherwise – of the analysis above as well as the identification of related issues and case studies.