Monday, March 30, 2009

UN Commission Comments on International Monetary Policy

Snippet from a draft document detailing the recommendations of experts of the President of the General Assembly on reforms of the international monetary and financial system:

"More generally, the current crisis has exposed deficiencies in the policies of some national authorities and international institutions based on previously fashionable economic doctrines, which held that unfettered markets are, on their own, quickly self-correcting and efficient. Globalization too was constructed on these flawed hypotheses; and while it has brought benefits to many, it has also enabled defects in one economic system to spread quickly around the world, bringing recessions and impoverization even to developing countries that have developed good regulatory frameworks, created effective monetary institutions, and succeeded in implementing sound fiscal policies."
link to document

The Commission discussed some of the details of the forthcoming report during a March 26th, 2009 press conference:
"He explained also that a large reserve of dollars in the hands of developing countries meant that poorer nations were lending “trillions of dollars” to the United States at close to zero interest rates when they themselves had huge needs. The problem with a single currency reserve system was that, no matter what currency formed the basis, countries would accumulate that currency in large reserves, forming a kind of “rainy-day fund”."
link to press release

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