DOMESTIC RESOURCE MOBILIZATION KEY TO SUSTAINABLE DEVELOPMENT, SECOND COMMITTEE TOLD IN FINANCING FOR DEVELOPMENT DEBATE

Press Release
GA/EF/2897

DOMESTIC RESOURCE MOBILIZATION KEY TO SUSTAINABLE DEVELOPMENT, SECOND COMMITTEE TOLD IN FINANCING FOR DEVELOPMENT DEBATE

The most important source of financing for development was domestic, including government expenditure, national savings and internal revenues, said the representative of Finland, as the Second Committee (Economic and Financial) this morning considered financing of development, including net transfer of resources between developing and developed countries.

Speaking on behalf of the European Union and associated States, he said that domestic resource mobilization had a key role to play in achieving sustainable growth, which was essential for poverty elimination. While calling for a reversal in the declining trend in official development assistance (ODA), he stressed that those resources should not be the primary source for development financing. The private sector and private flows, including foreign direct investments, were crucial elements in economic growth and development financing.

Norway’s representative said that lack of an adequate legal and institutional framework for private sector development and investment was evident in many developing countries. However, there were positive signs, such as an upturn in investment and growth, which could be reinforced by changing donor attitudes to relations with the development partner.

The representative of the Russian Federation said the task of attracting additional resources remained an urgent necessity. The effectiveness of domestic measures undertaken would depend largely on how international institutions could stabilize the international economic system and strengthen the international financial architecture.

The lesson learned from the financial crises, said the representative of Iran, was that they should be addressed globally: the traditional formulation of national policies was not adequate to prevent or mitigate the negative consequences of those crises at the national level, especially in the developing world. Better distribution of capital flows, and better integration of all developing countries into the international economy, could increase opportunities for promoting growth and development.

The Director of the Development Policy Analysis Division of the Department of Economic and Social Affairs made introductory remarks. In

Second Committee - 1a - Press Release GA/EF/2897 41st Meeting (AM) 15 November 1999

addition, a representative from the United Nations Conference on Trade and Development (UNCTAD) introduced that body’s report.

Also this morning, the Committee concluded its consideration of trade and development, with statements delivered by the representatives of the Former Yugoslav Republic of Macedonia, Saint Lucia, Egypt, the Philippines and Azerbaijan.

In addition, statements were made by the representatives of Guyana (on behalf of the Group of 77 developing countries and China), New Zealand, Mali and Mexico (on behalf of the Rio Group).

The Committee will meet again on a date to be announced.

Committee Work Programme

The Second Committee (Economic and Financial) met this morning to conclude its consideration of trade and development (for background information see Press Release GA/EF/2896 of 12 November) and to consider financing for development, including net transfer of resources between developing and developed countries.

Before the Committee was a report of the Secretary-General on the financial crisis and its impact on growth and development, especially in the developing countries (document A/54/471), submitted in response to General Assembly resolution 53/172 of 15 December 1998. The report draws upon the cooperative efforts of various components of the United Nations Secretariat and has benefited from the ongoing cooperation with the Bretton Woods institutions. Section II of the report contains an analysis of current trends in global financial flows, while section III examines the main actions taken on issues addressed in the resolution. Section IV proposes additional measures for consideration by the international community.

According to the report, actions at various levels, taken in response to the international financial volatility of 1997-1998, have involved improvements in existing arrangements and a rethinking of the policies required to prevent crises and to respond to crises. Some international reforms that might previously have been considered beyond agreement have now been accepted, while others remain under discussion. Some recent developments have been in the area of the international economic and financial environment, strengthening of the financial sector in developing and transition economies, improving information flows, improving standards and regulations, coping with the volatility of international financial markets, availability of emergency external financing, more effective and equitable policy responses to financial crises, and new institutional arrangements.

The report notes that there has been some return of financial flows to emerging markets and a recovery in stock market prices. Some developing countries are again able to arrange medium-term international lending, but the terms are more stringent than before the crisis began. Many countries have implemented policy changes, but there remains considerable scope for further domestic measures to modernize and strengthen domestic financial sectors with a view to improving the mobilization of domestic and foreign financial resources and to channeling them more effectively into productive investment. The reform of the international financial architecture remains an urgent piece of unfinished business.

According to the report, the increasingly global character of financial markets and growing links between different categories of financial business have given rise to proposals for the creation of a global agency for financial regulation and supervision. The Financial Stability Forum is performing some of the functions that have been proposed for a new agency, and that body may evolve further. However, in an increasingly financially integrated world, any such international mechanism should embrace not only those countries that are already leading players in world financial markets, but also those wishing to join those markets. Recent events have highlighted the need to ensure that the financial systems in such countries are sufficiently resilient before, rather than after, their integration into world markets. The use of regional and subregional structures within such an arrangement could make it more effective and more responsive to the needs of developing and transition economies, and could provide a mechanism for peer review of national regulatory authorities and their implementation of internationally agreed standards. The report states that various fiscal, financial and administrative mechanisms are available for oversight and control of the capital account, depending on national circumstances. The primary objective is to reduce the destabilizing effects of short-term flows without disrupting long-term flows that contribute to development. In particular, modulating the pace of inflows, particularly short-term inflows, during a boom can reduce the scope for sudden and large outflows during a period of stress.

The amount of public financing needed for international rescue financial packages depends in part on the contribution of the private sector, says the report. The approach to bailing in private creditors has aimed at facilitating “voluntary” renegotiation of debt instruments. A more inclusive approach would establish conditions and procedures for a general “standstill” on external financial transactions. The standstill would entail an internationally endorsed suspension of capital-account convertibility. In addition to halting capital flight, this would provide a breathing space during which domestic official and private borrowers could be brought together with foreign lenders to reschedule foreign debt.

A Contingent Credit Lines (CCL) type arrangement may be seen as an international analogue to the “lender of last resort” function, the report continues. The International Monetary Fund (IMF) can create international liquidity through the issuance of special drawing rights (SDRs). Consideration should be given to allowing the Fund to issue SDRs to itself, as needed, for use in lending to countries facing financial crises. Also, regional reserve funds could supplement IMF funds in times of difficulty.

The report states that while greater sensitization of the international community to social and development aspects of adjustment is welcomed, there is concern about the scope of the policy measures that are included in balance-of- payments adjustment programmes supported by the IMF. Governments in the midst of a balance-of-payments crisis should not be pressured to reach decisions that pertain to other matters, decisions that are normally made elsewhere and that are better handled under different conditions. IMF conditionality should not extend to issues related to economic and social development strategies and institutions, nor to political and governance issues.

The report concludes that international discussions of the world economic situation take place in various official forums, but the opportunities for most Governments to participate in discussions that influence policy makers from the major economy countries are limited. Ways need to be found to introduce greater pluralism into the governance of the international financial system, so that it reflects the diversity among economies, their levels of development and their goals.

Also before the Committee was a note by the United Nations Conference on Trade and Development (UNCTAD) on the financial crisis and its impact on growth and development, especially in the developing countries (document A/54/512/add.1), which is an addendum to a note by the Secretary-General (document A/54/512). Section II of the note describes the financial instability and crises. Section III of the note highlights policy responses in the areas of monetary policies, foreign exchange reserves and lines of credit, transparency, disclosure and early warning, financial regulation and supervision, policy surveillance and the pros and cons and feasibility of an international lender of last resort, and orderly debt workouts.

According to the note, the size, composition and distribution of external capital inflows to developing countries have all undergone fundamental shifts during the past three decades. Net capital inflows to developing countries in real terms have risen fivefold. However, measured in terms of the share of output of the recipient countries, the recent surge in capital flows represents only a recovery from the stagnant level of the 1980s rather than an increase over the levels attained during the years preceding the debt crisis. In the 1990s, the surge in capita flows and the decline in official financing have meant that private capital has accounted for 80 per cent of total capital inflows to developing countries. These changes in the composition of capital inflows as between public and private sources have been accompanied by shifts in their distribution among developing countries and regions. In particular, since official flows tend to favour poorer developing countries and regions, their decline relative to that of private capital flows has been a major determinant of the recent contraction of their share of total inflows.

The note states that the impact of the Asian financial crisis and of other recent difficulties in international financial markets on net private capital inflows to developing and transition economies show a fall of 50-70 per cent. The incidence and scale of the declines in 1996-1998 vary significantly among different regions. Net inflows of foreign direct investment (FDI) have been relatively little affected by recent financial crises. By contrast, net debt inflows have fallen very sharply.

The note concludes that, given the inherent instability of international capital movements, recent experience shows that any country closely integrated into the global financial system is susceptible to financial crises and currency turmoil. Developing countries are particularly vulnerable owing to their dependence on foreign capital and their net external indebtedness.

In an ideal world, according to the note, global arrangements designed for the prevention and management of financial instability and crises would include: some combination of improved disclosure and transparency by both public and private institutions; effective surveillance over national macroeconomic and financial policies; globally agreed but nationally implemented rules for the control of capital flows through oversight of international lenders and borrowers; an international lender of last resort with discretion to create its own liquidity; and orderly debt workout procedures in international finance.

The case for improved disclosure and transparency and strengthened financial regulation and supervision is now widely accepted, although the potential benefits from such improvements are probably exaggerated. On the other hand, there is resistance to strengthened multilateral surveillance over the monetary and exchange-rate policies of the major industrialized countries and to global rules regarding international capital movements. There is also unwillingness to establish a genuine international lender of last resort. Instead, efforts are being focused on piecemeal increases in the availability of external financing (with its attendant discipline on debtor countries), more orderly debt workout procedures, and involvement of the private sector in the resolution of financial crises.

The note states that developing countries would benefit from a more flexible approach that embodied the principle of national control over capital flows, together with internationally agreed arrangements for debt standstills and lending arrears. In particular, the autonomy of developing countries in managing capital flows and choosing their capital-account regimes should not be constrained by international agreements on capital-account convertibility, international investment or trade in financial services.

GORAN STEVCEVSKI (Former Yugoslav Republic of Macedonia) said that achieving the universality of the multilateral trading system should be a major objective of the new “development round” of the upcoming Seattle World Trade Organization (WTO) Meeting. The important work of the Tenth United Nations Conference on Trade and Development (UNCTAD X) on a positive agenda for the developing world in trade negotiations would complement those efforts. It was not the magnitude and pace of international integration that counted, but the quality of integration of countries into the world economy. It was important that UNCTAD X provided guidance and an integrated and collective perspective for future global development policies. The meeting was also expected to provide significant input to preparations for the Millennium Assembly. His country, a land locked country, with its economy in transition, remained particularly vulnerable and needed international economic assistance. It was important that UNCTAD X should devote more attention to the post-conflict rehabilitation and development of conflict-affected regions.

SONIA R. LEONCE (Saint Lucia) said that trade in one commodity accounted for half of her country’s exports. In the name of trade liberalization, access of that commodity to the world market had been eroded. Half a decade was proposed as the transitional period for Saint Lucia’s economy to diversify from that one commodity. Her country had called, over and over again, for fair trade and liberalization of markets, as well as preferential treatment for developing countries. There were huge disparities in exports and growth between developed and developing countries. Liberalization did not guarantee growth, and growth did not translate into better development. She fully supported and called for a code of conduct for transnational corporations.

There was a need to assess results of the Uruguay Round before proceeding to new negotiations, she continued. The Uruguay Round had benefits for a few and very little for the wide majority. The WTO had to take account of the special needs and concerns of developing countries, especially vulnerable ones, such as small island developing States (SIDS). She called for universality of WTO membership. Trade was too significant to the development of her country for it to be given superficial attention. She called for the active participation of the WTO in the high level meeting on financing for development. The United Nations, specifically the Second Committee, had the responsibility of sending the correct signal to the rest of the world -- that trade would be given the attention it deserved.

AMANY FAHMY (Egypt) said that more emphasis should be placed on the special nature of UNCTAD’s mandate to deal with trade, development and technology. It was the only body of the General Assembly with an exclusive mandate to deal with those different issues, and it needed the necessary financial and human resources to carry out that task. The mandate of UNCTAD and the functions of the WTO should not be confused.

A number of the initiatives proposed in the report contradicted the clear positions of some members of the United Nations, she said. Concerning paragraph 37 of the report, on the special and preferential treatment of developing countries, there should be an understanding that those provisions should not be offered unless a need could be demonstrated for them. She also noted that the initiative for partnership to deal with protective measures, such as protection of the environment and of labour, was one not based on clear reality. Protection of the environment required first of all that the developed countries met their commitments as on the transfer of technologies.

LIBRAN N. CABACTULAN (Philippines) said that his country was firmly committed to continuing reforms to achieve a fair and market oriented agricultural trading system. That was the only way to achieve global economic growth and ensure food security and sustainable development. The Philippines looked forward to the forthcoming negotiations on agriculture as an opportunity for levelling the playing field. An indicator of the success of such levelling would be the complete and global elimination of all forms of trade-distorting domestic support and export subsidies.

The mandated negotiations should enable the agricultural trading system to move closer to an environment that would allow developing countries to develop and benefit from their agricultural potential, he continued. Negotiations should give full effect to the principles of special and preferential treatment for developing countries, the purpose of which was to establish equity and fair competition where structural conditions were unequal. The framework for agricultural liberalization must enable developing countries to address their developmental needs, particular the issues of food security and poverty alleviation. Further, it should ensure that the policies of developed countries allowed developing countries to secure not only their fair, but also their due and just share in international trade.

ASHRAF SHIKHALIYEV (Azerbaijan) said that land-locked developing countries were vulnerable to changes in the external economic environment, and thus faced difficulties in their socio-economic development. Their concerns should be taken into consideration at UNCTAD X, as they required greater attention and support on the part of the international community. Azerbaijan continued its efforts to establish the optimal transit system and to modernize its transportation systems. It aimed to deepen cooperation with the United Nations and its specialized agencies to develop its transit environment. Like other land-locked developing countries, it faced serious economic challenges due to a lack of sufficient infrastructure. International support, to enable the integration of such countries into the world economy and their participation in the international trade system, was urgently needed to improve their overall economic situation.

Introduction of Reports

IAN KINNIBURGH, Director, Development Policy Analysis Division, Department of Economic and Social Affairs, introduced the report of the Secretary-General on the financial crisis and its impact on growth and development, especially in the developing countries. He said that the 1997-1998 financial crisis had underscored the inherent instability of international capital flows, the weaknesses of the international financial system, and the susceptibility of developing and transition economies to financial volatility. In a number of countries with fragile financial systems, the result had been a financial crisis that caused sharp declines in output and widespread human suffering. As those national crises had spread, even the financial systems of developed economies became vulnerable.

He noted that progress had been made by national and international authorities in improving information flows, on including the strengthening and broadening of the IMF Special Data Dissemination Standards. In addition, the results of IMF consultations with member countries on their economic and financial situation were now more readily available to the public. There was now also a better understanding of the relationships between capital account liberalization and financial sector instability in individual countries. The establishment of new financing mechanisms in the IMF –- the Contingent Credit Lines and the New Arrangements to Borrow –- had increased the availability of international financial resources for preventing and dealing with crises.

Among the lessons learned from the recent crises, he said, there was now wide agreement that adjustment policies needed to be tailored more closely to the specific circumstances of each country. Efforts to strengthen the international financial system had included consultations between the major industrial economies and selected other economies. There had also been greater collaboration between international institutions, as well as growing intergovernmental discussion cutting across institutions, such as between the Executive Boards of the IMF, the World Bank and the Economic and Social Council.

Despite progress, there was a range of issues on which international agreement had not yet been reached, he continued. The reform of the international financial architecture was not complete. National policy makers should be allowed greater autonomy in managing their external payments. Also, more equitable burden- sharing must be achieved between debtors and creditors and between the private and public sectors in resolving international debt crises.

Finally, developing and transition economies were not adequately represented in international economic policy-making or in the reform of the international financial architecture. Debate in a cooperative and participatory spirit would be needed to move towards agreement in the international community on those issues. The United Nations had a unique opportunity to bring finance ministries, foreign ministries, the Bretton Woods institutions and other relevant stakeholders together during the high-level event on Financing for Development in 2001 and in its preparations.

JAN KREGEL, High-level Expert of the United Nations Conference on Trade and Development, introduced UNCTAD’s report on the financial crisis and its impact on growth and development, especially in the developing countries. In highlighting the conclusions of the report, he emphasized that the net transfer of resources from the developed countries to less developed countries had been at times negative.

GEORGE TALBOT (Guyana), speaking on behalf of the Group of 77 developing countries and China, said that when the Committee had last debated the issue, the international community was still grappling with the impact of the Asian financial crisis. It was clear from the evidence of the past two years that the crisis had a marked impact on developing countries, while developed countries went virtually unscathed. Millions were thrown back into poverty and the gains made over decades were wiped out in a matter of months. While the current decade had witnessed increased flows to developing countries, that trend had been declining recently. At the same time, the pace of foreign direct investments was shown to have improved slightly in 1998, while it remained highly concentrated in a few developing countries. In the current scenario, private flows could not be regarded as a substitute for ODA, which had continued to decline in recent years.

The financial crisis and its subsequent fallout had given rise to the debate on the adequacy of the existing financial architecture to cope with and/or prevent such crises, he said. The debate had also focused on the implications of economic growth on development. Regarding the impact of the financial crisis on developing countries, the General Assembly had last year put forward a number of recommendations. Among them were strengthening macroeconomic policies and establishing adequate social safety nets. Much attention was also given to improving information flows.

However, he continued, the report acknowledged the shortcomings of those measures. The Group believed that continued debate on reform measures remained relevant. This year, discussion of such issues should focus particularly on the development dimension of development financing architecture. The Group appreciated the valuable initiative of Mexico, which had hosted a workshop on addressing the financial crisis and the promotion of stability.

MATTI KAARIAINEN (Finland), speaking on behalf of the European Union, Bulgaria, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia, Slovenia, Cyprus and Malta, said that the transfer of financial resources to developing countries was inevitably affected by financial crises. To improve the predictability of private flows, policy measures were needed to strengthen the domestic financial sector, to increase the credibility of domestic markets, to improve good governance and to put regulatory reform in place, where necessary. Those measures could help to maintain the confidence of foreign as well as domestic investors in continuing their efforts, and would encourage them to continue contributing to the development of the economy.

The most important source of financing for development was domestic, including government expenditure, national savings and internal revenues, he said. Domestic resource mobilization had a key role to play in achieving sustainable growth, which was essential for poverty elimination. In view of the changing pattern of partnerships, the European Union found it important to pursue innovative sources of financing and innovative mechanisms to enhance the private sector’s involvement in sustainable development processes. The downward trend in official development assistance (ODA) must be reversed and those resources should be used more effectively. ODA should only be catalytic and complementary to other financial resources, not the primary source for development financing. Also, ODA should be focused on implementing the International Development Targets.

The European Union also saw the private sector and private flows, including foreign direct investments, as crucial elements to economic growth and development financing, he continued. The downward trend in foreign direct investment should be reversed now, as confidence had been restored in international financial markets. The European Union would continue to contribute a large share of the transfer of resources to developing countries, so that they would be more firmly anchored to the world economy and capable of responding to evolving situations as they arose.

GRANT ROBERTSON (New Zealand) said the persistent effects of the global financial crisis had seen many countries suffer considerable set-backs in their development process. At the same time, globalization and technological advances were offering new avenues for increasing prosperity and living standards. ODA remained a key element in helping to meet the challenges of global development and seize the opportunities of a globalized world. The overall downward trend in ODA levels was therefore a matter for concern.

The specific vulnerabilities and developmental constraints of small island developing States needed to be addressed in the financing of development, he said. Another crucial issue in making progress towards global sustainable development was debt relief. The decisions by the G8 group of industrialized countries, and subsequently by the Governors of the World Bank and IMF, to enhance the Heavily Indebted Poor Countries (HIPC) Initiative was therefore welcome. It was essential that the Bretton Woods institutions and other international financial bodies should be involved in preparations for the financing for development event in 2001. That conference was a valuable opportunity to map out a coherent, achievable framework for the financing of development

MOHAMADOUN BAREMA BOCOUM (Mali) said that the decreasing trend in ODA flows was worrying. The resultant difficulties were exacerbated by the servicing of the public-sector debt. Globalization and trade liberalization were increasingly marginalizing developing countries, especially in Africa. The possibility of sustainable economic and social development seemed doomed in countries with negative growth.

Globalization had increased the vulnerabilities of developing countries by liberalizing trade. Trade liberalization had, for instance, led to a drop in revenues on export taxes. The question of foreign debt was the first priority of developing countries. Servicing that debt drained already meagre resources. African countries were faced with the choice of repaying debt or servicing their own people. No country could sustain development in such a climate. He appealed to other countries to follow the initiative of American President William Clinton, to forgive debt provided the monies freed were used for social development.

MAURICIO ESCANERO (Mexico), speaking on behalf of the Rio Group of Latin American countries, said that Assembly resolution 53/172 was among the most important outcomes of the Assembly’s fifty-third session, in light of the following three points –- its timeliness and relevance in the face of the international financial crisis, its contents, and its political scope. On the strength of that resolution, and to contribute to the present report, Mexico had held a high-level regional meeting towards a more stable international financial system on 5 and 6 September. That meeting enjoyed the participation of high-level governmental representatives as well as representatives of multilateral financial and social institutions. The Rio Group believed that the results of that meeting could be useful in putting together a programme of action to ensure international stability. The Group had stated its concern at the fact that once the impact of the crisis had passed, complacency returned to the international community about the need to address the global financial architecture. The Group would support long-term consensus building to improve early warning and response systems, guided by the aim of attaining shared development, the fundamental goal of the century.

OLE PETER KOLBY (Norway) said that the debt burden figured prominently among the impediments to increased net finance flows and improved development. In Latin American countries, debt servicing as a proportion of export revenues was projected on average at well over 50 per cent in the current year. In Africa it was almost 30 per cent. In that kind of setting, development would obviously be severely stunted, leaving limited scope to cater to the poor. Also, many governments did not have a strong sense of ownership in relation to their development programmes. The lack of an adequate legal and institutional framework for private sector development and investment, including the ability and the will to enforce agreements and taxation schemes, was evident in many developing countries.

However, he said, there were positive signs, such as an upturn in investment and growth, which could be reinforced by changing attitudes on the part of donors with regard to relations with the development partner. There was also a renewed and strengthened focus on poverty reduction as the overall goal for development assistance. Developing countries’ access to world markets, in particular markets in industrialized countries, needed improvement. Subsidized exports from developed countries severely hampered the competitive capability of producers in developing countries, and thus impeded economic growth and development.

VLADISLAV I. FEDORTCHENKO (Russian Federation) said that the transfer of resources for development from developed to developing countries continued to remain problematical. The financial crisis of 1997 and 1998 had rendered more acute the problem of the transfer of resources for development in developing countries and countries in transition. As a result of the crisis, a slump in the transfer of resources to those countries was witnessed. Net capital inflow to transitional and developing countries was down by 50 to 70 per cent. That dismal forecast was being applied to the whole of 1999 as well, and a resurgence was expected only in 2000. Other negative results of the financial crisis were increased difficulty of access to international markets and worsening conditions for international trade. The significant slowdown in economic growth and worsening social problems in many developing and transitional countries was eloquent proof that international financial support continued to play an important part in providing for the sustainable development of those countries.

The task of attracting additional resources remained an urgent necessity, he continued. The resource base of international financial institutions must be broadened, and a conducive domestic environment must be developed to attract both internal and external resources. Of priority was active support from the United Nations and international financial and trade institutions to enhance the potential of developing and transitional countries, thus enabling them to mobilize their own domestic resources and create a climate attractive to foreign direct investment. The effectiveness of domestic measures undertaken would depend largely on how international institutions could work to stabilize the international economic system and strengthen the international financial architecture. Some progress had been achieved in strengthening the international economic system, such as increasing transparency, and the IMF’s creation of mechanisms for unexpected emergencies. The United Nations system could play a very useful role, particularly with regard to monitoring and forecasting financial flows and strengthening early warning systems.

SEYED MOHAMMAD REZA SADJADI (Iran) said that one lesson learned from the financial crises was that global crises should be addressed globally: the traditional formulation of national policies was not adequate to prevent or mitigate the negative consequences of those crises at the national level, especially in the developing world. In nominal terms, official financing had only slightly increased. The increased share of international private lenders and investors in total capital flows to developing countries had been associated with a rapid increase in private sector borrowing, which had risen both in absolute term and in comparison with public and publicly guaranteed inflows.

Another important development was the shift in the role of private institutions active in the area of finance and capital flow, he said. Institutional investors such as insurance companies, pension funds and mutual funds had gradually become prominent purchasers of bonds and equities in developing countries, with the aim of realizing higher quick returns and diversifying their portfolios. There would therefore be more challenges resulting from short-term portfolio investment. Better distribution of capital flows and better integration of all developing countries into the international economy could increase the opportunities for promoting growth and development. One of the major areas for improvement was the establishment and strengthening of prudential regulatory and supervisory arrangements for financial and capital markets, particularly the banking system at the national and international levels.

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