Date: Sun, 2 Aug 98 17:00:08 CDT
From: email@example.com (Rich Winkel)
Subject: Drive for New World Financial Organisation
/** ips.english: 433.0 **/
** Topic: DEVELOPMENT-UN: Drive for New World Financial Organisation **
** Written 4:16 PM Jul 31, 1998 by newsdesk in cdp:ips.english **
UNITED NATIONS, Jul 28 (IPS)—Some developing nations and UN officials are pushing for the creation of a new World Financial Organisation (WFO) to protect developing nations and provide global economic stability through regulatory action.
The new organisation would help to
fill up the gap in the existing
structure of the financial system by monitoring and regulating private
capital flows, said Nurul Islam, the chairman of the UN
Development Planning Committee, which last week recommended creation
of the WFO.
The proposal formed part of a report that focused on lessons to be
learned from the Asian economic crisis. Among other things, a WFO
set standards for credit-rating agencies and rules for the
establishment and operation of international bankruptcy regimes,
the committee reported to the Economic and Social Council (ECOSOC).
U.S. delegate Seth Winnick, however, criticised the proposal saying
that the Bretton Woods institutions—the World Bank and
International Monetary Fund (IMF)—were
fully capable of
meeting the challenge presented by the current financial crisis.
Johannes Wedenig, the Austrian delegate, speaking on behalf of the 15
European Union (EU) members, echoed Washington’s
opposition. Europe was
convinced that the range of functions
proposed for such a new organisation may, if necessary, be undertaken
within existing structures, he said.
Hideki Ito, the Japanese delegate, also agreed.
organisation overlaps with the functions of the existing
organisations, to a large extent, he declared.
Defending the proposal, Islam stressed the WFO would draw its
membership largely from the private sector and, unlike the IMF, would
try to ensure that the private sector
helps bear the burden of
These functions...are not undertaken by the IMF, said Islam who
added that it was unlikely it ever would agree to add such additions
to its charter.
Islam agreed that some of the regulatory measures that the WFO might
enact already were performed by several bodies, but on an ad- hoc
basis which failed to protect poorer countries who were
receiving end of volatile capital flows, and were not part of the
Indonesia’s Bagas Hapsoro, speaking on behalf of the Group of 77
- the coalition of 132 developing nations—was more open to the
proposal. He told IPS that a paragraph dealing with the ways a WFO
could ensure that foreign private lenders were involved in crisis
very close to our hearts.
Asked what was lacking in the current international organisations, Bagas pointed out that two weeks before the crash of South-east Asian economies last July, the World Bank was predicting growth in Asia well into the next millenium.
Bagas said he understood the hostility of other members toward the
they stand behind the IMF, but added that all
nations must do more to explore the issue.
To stop the discussion
is very naive, I think we can find a middle ground.
The committee made a similar proposal regarding a new financial
organization in its 1997 report to ECOSOC but it
much attention, said Islam.
He said he was not surprised by the hostile Western reaction to the
proposal as people
always are afraid of a new idea.
U.N. sources told IPS the WFO proposal faced a long and arduous process of policy development, during which time U.N. members could seek to bring up the issue before committees and working groups.