A stable financial architecture cannot be achieved in the absence of a comprehensive foundation containing all of the elements needed to make a modern market economy work, World Bank President James Wolfensohn said Monday at a symposium in Tokyo.
“At the World Bank, we call this a comprehensive development framework,” the Bank president said. “But it is not just an agenda for the developing world. It is a key to reducing risk and ensuring greater stability.”
Wolfensohn’s comments came at the Global Finance and Development conference in Tokyo, a two-day symposium on global financial architecture jointly hosted by the Bank, the IMF, Japan’s finance ministry, and a leading Japanese newspaper, the Yomiuri Shimbun.
In a speech delivered to an audience of about 1,000, including Japanese government officials, NGO representatives, academics, and the media, Wolfensohn said the global financial crisis had revealed how interconnected every element of society is, and that an inclusive approach would be needed to build a more stable global system.
“It’s not just a matter of getting exchange rates right or fixing fiscal policy, important as these are,” he said. “It is about putting in place the broad range of institutional underpinnings needed to make a market economy work, not forgetting those elements that protect the vulnerable and the weak.”
Wolfensohn elaborated on the elements he believed should help guide national governments and international institutions working with them, namely: good governance with clear transparent laws and strong public institutions, and a system that fights corruption; a functioning judicial system; and a well-monitored and supervised financial system.
Turning to the social agenda, he said universal healthcare and education, and a social system that protects the economically vulnerable, were indispensable to this framework.
Communications systems (roads, telecommunications), clean water and sewerage systems, and power are “other elements needed to secure the equitable development of society,” Wolfensohn said.
National strategies must also consider protecting the natural environment and cultural heritage, and promoting rural and urban development.
“We want to fight poverty with passion, to establish equitable development, stability and peace right across our world,” said Wolfensohn. “I do not think we can do it any other way.”
Nobel laureate Professor Amartya Sen, Thailand’s Finance Minister Tarrin Nimmanahaeminda, Japan’s State Minister for Finance Tanigaki, IMF First Deputy Managing Director Stanley Fischer, and World Bank Chief Economist Joseph Stiglitz, also spoke at the symposium.
The conference wraps up Tuesday after a working session that includes a morning discussion on the international financial architecture, an afternoon discussion on the comprehensive development framework, and a press conference.
Helpful Links: In February, Wolfensohn sent out a proposal for a Comprehensive Development Framework - A Discussion Draft, to the Bank’s board of executive directors, Bank staff, and the development community, and posted it on the Bank’s external website. To read the draft, which fleshes out his comprehensive development strategy, click here.
To read a full transcript of Wolfensohn’s speech in Tokyo, click here.
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