2009 International Council Meeting and Luncheon for World Financial Leaders
On October 2, 2009, the Bretton Woods Committee hosted its annual International Council Meeting and Luncheon for World Financial Leaders in Istanbul Turkey, in conjunction with the 2009 World Bank/IMF Annual Meetings. The program involved multilateral roundtable discussions on global financial reform efforts and the role of emerging market economies in shaping the global economic and development agenda. Former World Bank Group President and newly announced Bretton Woods Committee Co-Chair James Wolfensohn provided the keynote address at the luncheon.
The Bretton Woods Committee's Executive Committee Chairman, Richard Debs chaired the meeting and led the discussion. Local country host and Turkey's Deputy Prime Minister and Minister of State Ali Babacan welcomed participants and framed the discussion by endorsing consensus points that emerged at the September G20 summit in Pittsburgh including the need to strengthen international financial regulation, promote coordinated national exit strategies, and reform governance of the international financial institutions (IFIs). Babacan urged strengthening the IMF surveillance mechanism and increasing voting shares of underrepresented countries to enhance the institution's effectiveness, legitimacy and credibility. He noted Turkey's unique fortune to have sidestepped many of the problems with the global financial collapse (no Turkish banks needed bailouts; insurance funds had adequate financing) and its proactive efforts at adopting and announcing an exit strategy that would begin tightening fiscal targets.
The discussion on global financial reform touched on numerous unresolved challenges that require a multilateral response, and featured presentations by Andrew Crockett (JP Morgan Chase International), Josef Tosovsky (Financial Stability Institute) and Jacob Frenkel (American International Group and Group of Thirty). Participants agreed that recent institutional changes - including new legitimacy conferred upon standard setting bodies such as the G20 and new mandates on the IMF and Financial Stability Board (FSB) - would encourage the development of more globally representative solutions. However, more clarity on the scope and roles of existing vs. new authorities is needed. Some progress has been made to improve bank regulatory standards on both a macro and micro level. For example principles for liquidity have been published and support for bank leverage ratios is becoming more widely accepted, however more consensus in this area is needed. All participants expressed concern that if the global economic recovery continues, much needed political will to tackle critical financial reforms will be harder to muster.
The discussion on emerging market countries (EMCs) featured speeches by Hans-Joerg Rudloff (Barclays Capital), Tharman Shanmugaratnam (Singapore Finance Minister), John Chambers (Standard & Poors) and Hisham Al Razzuqi (Gulf Investment Corporation). Participants welcomed EMC evolution into genuine partners with developing country governments, notably with the endorsement of G20 as leading decision making body. Similarly they noted the resilience of EMCs in spite of the economic crisis, as indicated by the vibrant growth of domestic capital and healthy levels of sovereign debt issuance displayed in numerous countries. To further strengthen their credibility on the world stage EMCs will need to improve conditions within their internal markets and regulatory regimes (e.g. court systems, corporate ownership structures, bankruptcy procedures, and transparency and the rule of law).
At the luncheon, Dick Debs introduced James Wolfensohn as the keynote speaker, and announced Wolfensohn had just agreed to serve as a Committee Co-Chair. In his acceptance speech, Wolfensohn challenged the Bretton Woods Committee to focus its attention on the plight of the least developed countries, which by 2050 will be home to 2.3 billion people living in absolute poverty, according to Wolfensohn. This will represent ¼; of the world's population. Wolfensohn indicated this is not only a human tragedy of great proportion, but it is in the interests of the world's rich countries to ensure their plight improves.
Wolfensohn said he would pursue a new initiative through the Bretton Woods Committee aimed at trying to help improve governance of African countries. The initiative would find funding to establish a vehicle to ensure that young, bright Africans can find educational opportunities abroad. During their studies abroad, they would be supported by stipends in return for a commitment to serve in their home country government for a period of years afterward. Support for this initiative was widely shared among members of the International Council.