UN thematic dialogue highlights need to reform global financial structure

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UNITED NATIONS, March 28 (Xinhua): The United Nations concluded yesterday an interactive thematic dialogue on the ongoing world financial crisis, with many participants calling for reforms of the existing global financial structure.
The three-day event, organised by the 192-member General Assembly, was convened ahead of a high-level UN conference on the economic crisis scheduled for June, to review the origin and scope of the crisis, its possible effects on people and the real economy, and the nature and adequacy of global policy responses to date.
Many participants, including government officials and experts, floated the idea of reforming the current global financial structure as the necessary means to reverse the world economic downturn.
As head of a UN expert commission on the economic and financial crisis, Nobel Laureate Joseph Stiglitz called for the creation of a global reserve system and a global economic coordination council.
"These are ideas whose time has come," Stiglitz said, as he introduced the commission's draft recommendations, which include immediate prescriptions essential to global recovery, as well as an agenda of deeper systemic reforms needed to ensure that such a recovery would be sustainable.
The Commission of Experts on Reforms of the International Monetary and Financial System was established last October by General Assembly President Miguel d'Escoto Brockmann to identify critical gaps in the policy response and in the current systemic framework to address the crisis. The group consists of 18 distinguished economists, central bankers and practitioners.
The commission argued that the financial crisis that rapidly spread from a small number of developed countries to engulf the global economy has provided tangible evidence that the international trade and financial system should be profoundly reformed.
A new global reserve system must be put into place to promote economic stability and equity, the commission said, as this would ease the deflationary effects of the massive accumulation of reserves that countries believe are necessary to brace themselves against global instability. Such a system would offset the risk of a drop in value of a major reserve currency.
Mexico's UN Ambassador Claude Heller, who moderated Friday's panel discussions, said that international consensus had emerged on the need for reforming the global financial architecture.
There also appeared to be broad consensus in acknowledging that a root cause lay with the flaws of the regulatory system, particularly in developed countries, Heller said. During the discussions, many delegates echoed the call for reform and underlined the need for greater equality of participation in the global economic and financial system.
In closing remarks, the General Assembly president stressed the "urgency of the economic and financial crises that are unfolding around us."
Taking note of the recommendations from the expert commission, the assembly president said that certain proposals, including those affecting Special Drawing Rights and the regulation of capital flows, received support among many delegations attending the meeting.
D'Escoto asked the commission to continue to meet and study the "complex information and global trends." "Our work is given greater urgency as speakers emphasized the expectation that the ongoing economic turmoil is likely a prelude to increased and unpredictable political instability that will complicate the recovery even further," he said.