Experts suggest annual BRIC summit and democratisation of IMF-Part IIIMay 15th, 2009 - 6:44 pm ICT by ANI
Financial Crisis and the New Global Financial Architecture
14. The BWI and IFI must be urgently overhauled and reformed. The current ‘Voice and Vote’ in the multi-lateral institutions do not provide an equitable and effective agency for addressing the specific concerns of nation states, specially the developing and emerging economies.
15. It was agreed that the BRIC countries must coordinate at the G-20 and at the G-8 + 5 to ensure the restructuring and reconstitution of the BWI. There was also a suggestion that the BRICs may wish to seek institutionalisation of the G-20 Leaders summit as it provides a more democratic framework for global decision making.
16. Doubts were expressed on the ability of the IMF (FSF) to serve as a regulator or in making decisive interventions. While some suggested an alternate body for effective financial regulation, there was consensus on the need for democratising the IMF and thereafter giving it the sanction and authority through the FSF or other instruments to play the role of a regulator.
17. It was also generally agreed that prior to further resource mobilisation for and authorisation to the IMF, the governing structures of the World Bank and the IMF must be reconstituted to reflect current realities. GDP on PPP basis could be one basis for determining quotas and voice in this and other BWIs.
18. The issue of an alternate reserve currency or a new global currency was discussed. While it was accepted that the predominance of the ‘US Dollar’ is not desirable, it was agreed that the possible consequences of drastic changes in the current currency regime required further examination.
19. The balance of advantage in conducting Intra-BRIC trade in BRIC national currencies such as recent offerings of China to other EMEs, even if initially on a modest basis, was recommended for consideration.
20. It was agreed that the ‘Stimulus’ oriented responses across the globe needed a coordinated approach in order to cushion the inflationary impact that may result and depriving developing countries of access to finance (Crowding Out) for development. Regular meetings of BRIC Central Banks should be instituted to keep these developments under review.
21. A BRIC fund and/or issue of BRIC bonds could be commissioned for development of large strategic projects of intra-BRIC collaboration.
22. BRIC should set up mechanisms for commissioning serious studies to assess the potential of intra-BRIC trade expansion as an offset against the shrinking western demand and to also achieve diversified growth strategies.
23. Since BRIC countries have significant commodity imports and exports, there was a clearly felt need for shifting the ‘price discovery’ of important commodities from the west towards the east. As a case in point BRIC account for over 18% of oil trade and should exert some influence in price.
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Tags: bric countries, brics, bwi, democratic framework, drastic changes, emerging economies, emes, fsf, global currency, global decision, global financial architecture, imf, nation states, national currencies, predominance, quotas, reconstitution, reserve currency, resource mobilisation, stimulus