The challenge
we all face--both developing and developed economies--is
to find workable solutions [to the global financial
crisis]. We need to discard the current paradigm which
views this as an emerging markets crisis and concludes
that the solutions must therefore be found in the
workings of those markets. (...)
The [global] nature of this crisis demands bold solutions.
Among these must be ways of dealing with the distortions
created by speculative and unsustainable capital flows.
The world clearly needs a set of "rules of the
game" that we all adhere to. I am not here referring
to draconian exchange controls and the building of
new barriers. But we do need significantly better
financial market regulations. (...) Moreover, more
work is needed to increase the noncompliance costs.
Currently, it is all too easy to shift the burden
of speculative positions by socializing their costs.
Sound
economic policies
The most sobering response to the current crisis has
been the recognition that there are no easy solutions
and that the standard policy prescriptions (...) do
not always offer sustainable solutions. The world
we live in is far too complex for pat responses. Solutions
must lie in an approach that inextricably links economic
policy and social development. The temptation in times
of crises is to focus almost exclusively on one or
the other.
Finding a balance between social development and sustainable
economic policies is the best way of strengthening
our economies and building the flexibility required
to withstand crises of this nature. (...) The focus
must shift from instruments to institutions and systems.
(...)
Collectively, we will have to agree on a process to
ensure that multilateral institutions have their articles
revisited, given that the conditions which gave rise
to these institutions have changed so dramatically.
We need institutions appropriate to the time and the
circumstance. We need institutions and systems capable
of ensuring that markets work for the benefit of economic
growth and social development and not against it.
(...) And we need institutions strong enough to ensure
adherence to the rules.
The challenge of the new millennium is to overcome
the poverty and inequality that continues to ravage
so much of the developing world. We have a responsibility
to ensure that our policies strike the right balance
between economic policy and social development.
The Honourable Trevor Manuel
Minister of Finance
South Africa
