India seeks changes in global financial architecture (With: India calls for coordinated fiscal stimulus to arrest recession)

November 16th, 2008 - 12:53 am ICT by IANS  

Manmohan SinghWashington, Nov 15 (IANS) Indian Prime Minister Manmohan Singh Saturday called for changes in the global financial architecture reflecting changes in economic realities to avoid a repeat of the financial crisis.”The new architecture we design must include a credible system of multilateral surveillance, which can signal the emergence of imbalances that are likely to have systemic effects.”

It “should also put in motion a process of consultation that can yield results in terms of policy coordination”, he said at the summit of the Group of 20 (G20) leading economies here.

The historic summit convened by US President George W. Bush brings together Group of Seven industrial nations, a dozen emerging markets like India, China, Brazil and South Africa, and the European Union, which together account for 90 percent of global economy.

Emphasising the importance of broadbased multilateral approaches to their efforts, Manmohan Singh said: “Bodies such as the G-7 are no longer sufficient to meet the demands of the day.

“We need to ensure that any new architecture we design is genuinely multilateral with adequate representation from countries reflecting changes in economic realities,” he added.

The prime minister said he agreed “with the general consensus that there are several factors behind the crisis and the future global economic architecture must be designed to deal with these”.

“These include failure of regulatory and supervisory mechanisms, inadequate appreciation and management of systemic risks and inadequate transparency in financial institutions.

“The International Monetary Fund is the logical body to perform the task of multilateral surveillance of macro-economic imbalances and their relationship to financial stability,” he said but “it is relevant to ask whether its systems and procedures are adequate to the task.”

The summit, Manmohan Singh said, had raised expectations in many circles that it would work to produce a new Bretton Woods II.

“The world has certainly changed sufficiently to need a new architecture, but this can only be done on the basis of much greater preparation and consultation.

“We can, however, signal that we are serious about starting a process that will, in time, produce an architecture suited to the new challenges and vulnerabilities facing the world economy and reflective of the changes that have taken place in the economic structure.

“We must also give the world a clear signal of our resolve to take specific coordinated action to handle the current crisis in a manner, which restores confidence and which also responds to the needs of developing countries,” he said.

“We need to ensure that the processes we set in motion today safeguard and promote the welfare of our future generations,” the prime minister said.

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