PRESS BRIEFING BY CHAIRMAN OF COMMITTEE FOR DEVELOPMENT PLANNING
Press Briefing
PRESS BRIEFING BY CHAIRMAN OF COMMITTEE FOR DEVELOPMENT PLANNING
19980723
A new global regulatory body -- a world financial organization -- is needed to regulate and monitor international private capital flows, the Chairman of the United Nations Committee for Development Planning, Nurul Islam, said this morning.
Speaking to correspondents at a United Nations briefing, the Chairman said the new body would provide overall guidance on international standards and codes of conduct for private capital. It would also be able to identify future problems that would need regulation and international supervision; review existing rules; and establish and monitor the international practices and norms in the field.
Mr. Islam said the proposal for a new regulatory body is one of several contained in the Committee report to the Economic and Social Council. The Development Planning Committee is a group of independent experts who advise the Economic and Social Council.
In the new situation where developing countries were becoming major players, there should be a more systemized forum than the private ad hoc bodies already in existence, he continued. A world financial organization would serve to bring together private creditors and borrowers at the onset of a crisis to discuss how to delay, reschedule or stop payments on loans. It could also devise, in collaboration with private and international institutions, what kind of rules should govern lending and borrowing, as well as monitor the application of such rules at the national level and set up rules for international bankruptcy regimes. The organization might also create standards for credit rating agencies which had tremendous influence on the credit-worthiness of the various corporations and countries in the securities market.
He said the Committee would present the Economic and Social Council with the outline and basic ideas of its proposals for the new regulatory body, and the details could be worked out by an independent committee of experts.
The Committee report reviews, among other issues, the Asian financial crisis and the lessons it held for possible measures to deal with similar situations in the future, criteria and methodology for the identification of least developed countries, and old age security issues in developed and developing countries.
Mr. Islam described several Committee recommendations to deal with the new phenomena of highly volatile movement of short-term capital, including the improvement of existing arrangements by strengthening the resources of the International Monetary Fund (IMF), revising quotas of member countries, and
Development Planning Committee Briefing - 2 - 23 July 1998
issuing new special drawing rights that would take into account the phenomena of the highly volatile capital movements. The Committee also pointed to the need for a fund to which a country in crisis could have immediate access.
The Committee further recommended that reports of the annual Fund consultations carried out in member countries, especially borrowing countries, should be made public and available to the entire international community, he said.
He also suggested that there should be periodic reviews by independent experts of the major players in the international financial systems, such as the IMF, the World Bank, the Bank of International Settlements and important banks of donor countries. An independent body of experts should evaluate how those bodies behaved in the recent financial crisis. Such a group should be able to decipher the information and come up with lessons for all to follow. The body of experts should be appointed by the heads of the Fund, the Bank and the Secretary-General, and its report should be debated in the governing bodies of their respective organizations so that there would be full transparency. Information should be public and made available to outsiders who were not involved in the crises.
In response to a question, Mr.Islam said very few developing countries were involved in the international regulatory committees. Their problems and experience were not adequately reflected. If there was a banking standard, should it be universally applied to all countries, regardless of their state of development? It had been suggested that if the banking and financial systems in the affected areas were more efficient, modern and well regulated, such intense financial crisis in East Asia would not have occurred.
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