Stiglitz calls for a reshaping of the global financial system in dialogue with international civil society
NEW YORK - June 24, 2009 - Today, in an open dialogue with representatives of civil society, Prof. Joseph Stiglitz, Chair of the Commission of Experts of the President of the UN General Assembly on Reform of the International Monetary and Financial System, detailed many of the recommendations proposed by that Commission and in particular called for a “new intellectual framework” which can lay the basis for a new global financial architecture.
Over 200 leaders of local, national, and international civil society organizations involved in the UN Conference on the Financial and Economic Crisis and its Impacts on Development presently taking place at UN Headquarters in New York, participated in this exchange of ideas with Prof. Stiglitz and seven other members of the Commission of Experts.
At the event, Prof. Stiglitz spelled out how developing countries’ lack of financial resources and policy space has prevented them from implementing robust contra-cyclical recovery plans, and recommended that needed resources for the world’s poorest countries are provided in the form of grants, not loans, in order to ameliorate their debt burden. Prof. Stiglitz also decried the retreat from transparency and accountability in accounting standards, particularly with regard to complex financial instruments such as derivatives, and called for an end to bank secrecy and tax evasion as a way to prevent continuing capital outflows from developing countries to the developed world.
Pedro Paez, former Ecuadorean Minister of Economic Cooperation and member of the Commission, advocated for the creation of new regional financial institutions as an alternative to the current international system led by the flawed Bretton Woods Institutions, and called for an immediate moratorium of the external debt of developing countries mired in the current financial crisis.
During the event’s conclusion, Prof. Stiglitz pointed out that the current UN Conference is only the first step towards the construction of global solutions, involving all UN member States, to this global crisis. Ideally, according to Prof. Stiglitz, this process can lead the way to the implementation of a new economic model which is based not only on human needs but also on environmental sustainability, and which puts the financial sector in its place as a “means to an end, not an end in and of itself”.