This year begins with promising rhetoric from the IMF managing director and the Financial Stability Board (FSB) Plenary meeting – outlining the goals and challenges of macroeconomic policy and global financial regulations. At the IMF’s press briefing for the new year, Christine Legarde identified several challenges, but the most poignant and pressing were (1) commitment to financial reform and (2) focus on the realeconomy. Legarde acknowledged emerging market and low-income countries’ concerns about the lack of decisive action to address the advanced economies’ crises. She claimed that “those spillover effects, including in terms of confidence building, are clear.” To address this confidence gap, New Rules advocates that emerging market and low-income countries be included in the financial reform discussions happening at the global level, particularly in the FSB. We will be pushing for greater inclusion and transparency in these discussions in 2013.
New Rules welcomes Legarde’s focus on the real economy. The IMF managing director clarified that this means a focus on “not any growth, but a growth that can actually deliver jobs.” To achieve these aspirations, IMF lending, technical advice and policy recommendations will need to promote long-term, sustainable and inclusive growth. This will require major institutional reform as most policy recommendations accompany lending reflect a theoretical economy and not the real economy. In adjusting its view on capital account regulation (capital controls), the IMF has demonstrated that institutional reform is feasible and that it aspires to be a more effective and legitimate institution. With this in mind, New Rules understands that reform is difficult and slow, but is resolute to improve the governance and impact of the IMF.
We are equally committed to improving the governance and impact of the Financial Stability Board. During its January Plenary, the FSB finally incorporated under Swiss law – a reform New Rules has been advocating for two years. This will give the FSB a legal personality and enhance its capacity to coordinate global financial regulatory policies. Most importantly, this will help to strengthen the governance of the FSB. Additionally, this new organizational footing will improve the FSB’s effectiveness and likely increase implementation of the policies it develops and approves. This is a positive prospect, but like the IMF, the FSB will need to direct attention to the impact of such policies on the realeconomy. This year, New Rules will be mobilizing a strong effort to assess the impact of FSB policies and recommendations on the real economy. As stated above, we will also be advocating for broader participation in the FSB policy development and approval process.
These two issues will be part of the broad agenda for New Rules for Global Finance in 2013. To find out how you can support New Rules work, please visit www.new-rules.org/donate or contact Nathan Coplin at [email protected].