Wed, Oct 24, 2018
On October 10, 2018, the Bretton Woods Committee held its annual International Council meeting in Bali, Indonesia alongside the International Monetary Fund and World Bank Group Annual Meetings. An esteemed group of global leaders joined approximately 60 Committee members and friends in an intimate roundtable discussion. This year’s conversation – Modernizing Multilateralism: Leadership for the Next Generation – examined the current and future forces shaping the global economy and discussed ways the multilateral system and institutions can be modernized to meet the demands of the next generation.
STEER THE BOAT, DON’T LET IT DRIFT, was the opening message on the global economy from Christine Lagarde, Managing Director of the International Monetary Fund in a conversation with Masood Ahmed, President of the Center for Global Development. Lagarde urged countries to take preparatory measures now to increase resilience for less-favorable economic conditions that the IMF is forecasting ahead, particularly in developing and emerging market economies. Financing costs are increasing against a backdrop of high sovereign and private debt, she explained. Depending on the type of economy, she recommended rebuilding buffers, using flexible exchange rates as shock absorbers, and reducing surpluses to fix imbalances. Lagarde asserted, “You have to really steer effectively, decisively, and with political courage.”
FIX INTERNATIONAL AND DOMESTIC TRADE TOGETHER, according to the experts. Lagarde commented that there are improvements that can be made to the global trading system in terms of efficiency and fairness on international, regional, and domestic levels. She suggested that retraining, relocation assistance, and sufficient social safety measures will help those disadvantaged by global trade. Lagarde implored, “Let’s fix it together, […] rather than break it.” This sentiment was echoed by Thomas Bernes, Distinguished Fellow at the Center for International Governance Innovation, who said that domestic labor adjustment policies are critical, and countries should focus on helping workers adapt to a globalized economy and changing supply chains. Internationally, Bernes recommended updating the World Trade Organization rules on substantive issues, such e-commerce, and implementing institutional governance reform.
COOPERATION IS KEY TO TOMORROW’S ECONOMY, the speakers demonstrated across multiple sectors. Takatoshi Ito, Professor of International and Public Affairs at Columbia University, said that the G20 Eminent Person’s Group (of which he is a member) report strongly supports the IMF working with regional financial institutions, such as the Chiang Mai Initiative and the European Stability Mechanism, to augment both the Fund’s resources and ideas. He proposed including more voices from Asia, considering the increasing weight of Asian countries within the global economy. Meridiam CEO Thierry Deau complemented this point, explaining that for infrastructure development, the MDB system is critical to de-risking projects in countries and regions where the private sector would otherwise be unable to invest. Deau also expressed that MDB-private sector partnership is vital to achieving the Sustainable Development Goals, particularly regarding climate change.
MORE THAN MODERNIZING IS NEEDED FOR A SYSTEM UNDER THREAT, insisted Ernesto Zedillo, Director of the Yale Center for Globalization and former President of Mexico. He asserted that the multilateral system itself is threatened by the actions of the United States and it must be defended and adapted in this unprecedented environment. “This is not business as usual,” he candidly said, “The very fundamental ideas that gave rise the Bretton Woods institutions and the rest of the multilateral system […] are being questioned.” Zedillo called for clear communication of why a rules-based international system and functioning multilateral institutions are in the national interest of the system’s stakeholders. In the roundtable discussion that followed, Committee member Susanna Cafaro bolstered this idea, “We have to rethink and reimagine and create a connection between the multilateral institutions and the people.”
THE FUND IS GEARING UP FOR FUTURE DEMANDS, according to Lagarde, who argued that as global growth begins to slow more member countries will likely need IMF programs, and thus a quota increase is necessary not only for the Fund, but for its membership. Ito concurred, as well as Singapore Deputy Prime Minister Tharman Shanmugaratnam, who participated in the discussion. Ahmed pointed out that, “If anybody needed a reminder of the need for the Fund to have enough firepower, only recently we had the example of Argentina, which clearly demonstrated how important it is for the Fund to come with adequate amount of financial support.”
COMMITTEE LAUNCHES BRETTON WOODS@75. Bretton Woods Committee Executive Director Randy Rodgers announced that in honor of the 75th Anniversary of the 1944 Bretton Woods Conference, the Committee is launching Bretton Woods@75, a global dialogue to honor 75 years of economic progress and to revitalize the spirit of Bretton Woods now and for the future. Rodgers explained that the Committee will present opportunities throughout the year for members and friends to contribute to the historic dialogue in conferences, focus groups, written contributions, surveys and other events. He detailed two historic Committee initiatives: the Bretton Woods@75 Compendium and the Bretton Woods@75 Gala. Committee Deputy Director Emily Slater presented some of the preliminary results of the recent Bretton Woods@75 Member survey during the roundtable discussion.
See the links below for press coverage of the Bretton Woods Committee 2018 International Council:
Financial Times - IMF readies for further danger signals in emerging markets
El Financiero - FMI ‘enciende’ las alarmas en mercados emergentes
Sina Finance - IMF总裁拉加德：新兴市场是时候“动用一切工具”
Sin Chew Daily - 拉加德促新兴市场．歇尽所能阻资本外流
ZF Business International - Creşte teama că FMI va trebui să-şi înmulţească intervenţiile în lumea emergentă.