MaximsNewsNetwork: TRADE & DEVELOPMENT: FINANCIAL REGULATION UNITED NATIONS UNCTAD

MaximsNewsNetwork: 09 September 2009 - UNTV: A new UN report says that more effective regulation and supervision of financial market activity is indispensable to prevent a repeat of the current global financial and economic crisis. But equally important, is a reform of the international monetary and financial system aimed at reducing the scope for gains from currency speculation and at avoiding large trade imbalances.

The President of the General Assembly Miguel d'Escoto Brockmann and Heiner Flassbeck from the UN Conference on Trade and Development (UNCTAD) held a press conference today (8 September) at UN Headquarters to officially launch the 2009 edition of the Trade and Development Report.

The Report presents a gloomy global economic outlook in the context of the ongoing global financial and economic crisis and looks at the channels through which this deep crisis, which originated in developed countries, is spreading to developing and transition economies.

D'Escoto Brockmann told reporters that although the rate of decline of the world economy appears to be slowing, for many people, particularly in developing nations, the crisis has only begun.

In analyzing the causes of the crisis, the report focuses on the role of excessive risk-taking made possible by financial deregulation and innovation in obscure financial instruments. Flassbeck said that there is no clear signal that the world is ready to emerge from the crisis and added that in terms of financial regulation, not much has been achieved.

The likelihood of a recovery in the major developed countries that would be strong enough to bring the world economy back to its pre-crisis growth path in the coming years is quite low, the report cautions.

Flassbeck said that we do not see a total collapse but warned that some economies might take up to six years to return to the levels that we had reached in 2007, before the crisis.

He blamed financialization for the sharp rise in food prices experienced last year and asked can the international community allow that due to financial speculation the rise of the price of wheat is driven to a level where people are starving or people are dying of hunger?

The Trade and Development Report 2009 concludes that more effective regulation and supervision of financial market activity is indispensable to prevent a repeat of the current global financial and economic crisis, but equally important is a reform of the international monetary and financial system aimed at reducing the scope for gains from currency speculation, and at avoiding large trade imbalances.

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• supervision
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• Heiner Flassbeck