" October 24. Saints of the Day A summary of Vatican Radio's Note "to reform the international financial system ...

" presented at the conference referred to in the previous post »

Of d. giampaolo Centofanti

• At 11.30 am this morning, in the 'Hall of the John Paul II Vatican press office, was presented the Note of the Pontifical Council Justice and Peace: "For a financial system reform International Authority in view of public responsibility universal ". Speakers at the press conference: the Em. Cardinal Peter Kodwo Appiah Turkson, Chairman of the Pontifical Council for Justice and Peace, Archbishop Mario Toso, secretary of the Pontifical Council; Prof. Leonardo Becchetti, Professor of Economics, University of Rome "Tor Vergata". We publish the following actions: • INTERVENTION CARD. Peter Kodwo Appiah Turkson • On 3 and 4 November next, in Cannes, France, will be the sixth Heads of Government meeting of the G-20, which will meet to discuss main issues concerning the economy and finance mondiale.Il Holy Father and the Holy See follow these issues with living and special attention not only constantly exhorting and encouraging "Action of the whole", but an action based on a "clear view of all economic, social, cultural and spiritual "(Preface). In this spirit of discernment, the Pontifical Council for Justice and Peace, through a note, and shares offer a contribution that can be helpful for the deliberations of the G-20, entitled to a reform of the international financial and monetary system from the perspective of an authority public responsibility to the world. The note begins with a prophetic statement contained in the Encyclical Populorum Progressio, Pope Paul VI. It was 1967, and was in full war Cold. So wrote Pope Paul VI in this famous passage where he defines the Church "Expert in humanity": "The current situation requires action by the world's overall

based on a clear vision of all the economic, social, cultural and spiritual. Expert in humanity, the church, far from pretending any way to interfere in state politics, "has targeted a single goal: to continue, under the impulse of the Spirit of consolation, the same work of Christ, came into the world to bear witness to the truth (cf. Jn 18:37), to save, not to condemn, to serve, not to be served (Cf. Jn 3.17; Mt 20.28, Mk 10.45). " With these words the Pope's polished Populorum Progressio sketched the shapes of the profound relationship between the Church and the world that woven into the sacred value of human dignity and in pursuit of the good common: the two pillars around which the route has been defined Note the reflection. In this regard, I echo the words of the living memory of the Holy Father Benedict XVI, who, just two years ago, in 2009, in Caritas in Veritate wrote: "the complexity and gravity of the situation economic rightly cause us concern, but we must take with realism, confidence and hope the new responsibilities to which we called by the prospect of a world that has needs a profound cultural renewal and rediscovery of values background on which to build a better future. The crisis forces us to rethink the our way, to give us new rules and to discover new forms of commitment, build on positive experiences and to reject negative ones. The crisis becomes an opportunity for discernment and new strategic planning. In this , with confidence rather than resignation, it is appropriate to address the difficulties the present moment "(21). In this sense we need a "new humanistic synthesis", as he acutely Benedict XVI called, to which we are presenting the document is oriented with the aim of bringing back the forces, particularly financial ones, after their misuse, to be a crucial tool in the service of progress and the general development of the real economy (cf. CIV, 65): a development that new soothe the serious social issue which is so hard hitting our time. In the encyclical Pacem in Terris, 1963, Pope John XXIII had somehow predicted the current globalization in the sense of progressive unification of the world. And in this respect, warned on need to harmonize policies to progressively larger power needs of human communities (cf. Pacem in Terris, 70). As a result of this understanding, John XXIII called for the formation "World public authority" (ibid., 71-74), which was able - without damaging the legitimate sovereignty - to the dialogue of reason always prevail legal and political violence, given in terms of conflict or social injustice, both in terms of war being waged. Connected to the social teaching of the popes and wanting to specify further practical guidance offered by Benedict XVI in Caritas in Truth (cf. especially No. 67), the Pontifical Council, through the brief thoughts here in consideration not only proposes the establishment of a Public authority to universal jurisdiction, necessarily super

partes, but tries to articulate this proposal in more detail, as will be seen in the section entitled "Towards a reform of the system International Monetary and Financial responsive to the needs of all peoples "(cf. pp.. 28-35). The Authority shall have the specific purpose of the common good, and will have to work and not be structured as an additional lever of power of the powerful over the weak. In this sense, it should play that role that non-partisan, through the rule of law of the person, promotes the integral development the entire human community, understood - in this context - as a "community of Nations ". I conclude with the words of Benedict XVI. In the Encyclical Caritas in Veritate wrote: "The complexity and gravity of the situation economic rightly cause us concern, but we must take with realism, confidence and hope the new responsibilities to which we called by the prospect of a world that has needs a profound cultural renewal and rediscovery of values background on which to build a better future. The crisis forces us to rethink the our way, to give us new rules and to discover new forms of commitment, build on positive experiences and to reject negative ones. The crisis becomes an opportunity for discernment and new strategic planning. In this , with confidence rather than resignation, it is appropriate to address the difficulties the present moment "(CIV, 21). Only then can the wind blow hard go of hope, the only able to remove the biggest enemy of our time: the fear of present and future. [01488-01.01] [Original text: Italian] • Intervention by HE Mons. MARIO TOSO • The note of the Pontifical Council for Justice and Peace on Reform of international financial and monetary system in perspective of a public authority intends to propose a universal jurisdiction reflection on possible ways forward - in line with latest social teaching of the popes 1 - to achieve political and effective financial and monetary institutions and representative in world-oriented to a truly human development of all people and popoli.È known that the Church intervenes when talking about social issues, moves on the floor of his expertise in ethics and religion. Therefore, if it addresses the current crisis in the monetary and financial system is not intended entering into purely technical issues, while not ignoring them. The discernment and planning that it has in place are the result of cooperation of knowledge within a variety of theological and moral perspective. It is so that in the analysis, interpretation and practical guidelines elaborated, The Church proposes a knowledge of wisdom, synthetic type, global, which ethical and cultural framework that underpins and directs the practice and manufacturer

reform according to the Christian inspiration. In particular, in the reflections of the Pontifical Council offered a reinterpretation of the serious economic and financial crisis in which we are still immersed, indicating, among other causes, not just ethical, but more specifically ideological ones. 2 The old ideologies are waned. But there are lots of new, no less dangerous for the development integral of the human family. They have a negative impact on the system International Monetary and Financial and globalized, causing inequalities in terms of sustainable economic development, as well as serious problems social justice, especially putting a strain on weaker peoples. One These neo-liberal ideologies, and technocratic neoutilitariste that while flatten the common good of economic, financial and technical exaggerated, jeopardizing the future of the institutions themselves democratic 3. How to overcome these distorted views and practices? Moving to a new thought, a new humanism, global, open to transcendence, that the primacy of 'being on' ethics have command over "Friend of the person", ie an 'ethics of fraternity and solidarity, and the subordination of economics and finance to policy, responsible for the common good. Only then you can win idolatry of the market with the only rule aims and prospects purely technical and performative, ignoring them that ethics should permeate intimately. In fact, the markets, being created by man, bearing an inscribed natural ethical code, which can not be ignored, otherwise their dehumanization and desemantizzazione. With regard to the design aspects, ie the indication of ways of solution, the Note of the Pontifical Council, buttoning the social teaching of the popes, suggests that globalization is governed by the formation of a 'public authority universal jurisdiction. However, this perspective, the path traced by Pacem in Terris of John XXIII is proposed with determination and clarity by Benedict XVI in Caritas in Veritate. 4 reflections of the Pontifical Council intend to develop it, wishing well outlining, albeit briefly, suggestions for the reform of the current international institutions, they are more authoritative and democratic. These expression of an agreement must be free and shared between people, more representative and more companies, more legitimate, more engaging all political and civil society. They must be impartial in serving the Best of all, can provide effective leadership and at the same time, allow each country to express and pursue their common good, according to the principle of subsidiarity, in the context of the global common good. Only in this way international institutions able to promote the existence of monetary and financial systems efficient and effective, that free markets stable, governed by an adequate legal framework, functional development sustainable and social progress of all, inspired by the values of charity in truth. The world authority must not crush or exploit

National or regional governments. It must understand its ability to orient and to decide, and to punish on the basis of law, as a put serving the various member countries, that they may grow and possess market efficient and effective, that markets do not over pro-tected by national policies paternalistic, not weakened by systematic deficit of Finance Public and domestic products, are likely to prevent the markets themselves to operate in a global context as institutions open and competitive. 5 It should be noted that the considerations presented by the Pontifical Council not demonize all the money and capital markets, but they considered a "public good": 6 fundamental good then, but not good or ultimate end. For this, they must be functional and ministerial to the realization of the universal common good of the human family, thanks to guidance offered by the various subjects of social policy and civil society at national and International. The text of the Pontifical Council shows, perhaps, its greatest originality, when he tries to outline some stages and characteristics of the way to go in the constitution of a public authority with particular reference to universal jurisdiction scope Economic and Financial. First, sets out a reform process implemented "as a point having reference to the United Nations, because the amplitude World of its responsibilities, its ability to unite the nations the earth and the diversity of its duties and those of its agencies specialized. "7 Secondly, it offers a clear increase in quality compared to existing informal institutions and fora. Need to innovate than them, the UN, the Bretton Woods institutions failed, 8 to G8 or G20, for more. It should, in particular, the transition from a decision system of governance - that is, horizontal coordination between Member no impartial authority - a system that, in addition to horizontal coordination, have impartial authority, with power to decide through democratic processes and to sanction in accordance with the right. Such a shift towards a "rule of law" and forms of "government" world, can not happen if you do not give political expression to existing interdependence and cooperation and, therefore, not abandoning the practice of multilateralism is at the diplomatic level both in the plans for the sustainable development and peace. 9 According to the reflections of the Pontifical Council of the present enlargement G7 G20, also configured in other ways, involving more, in the guidelines to give the global economy and finance, the responsibility of the countries with highest population, developing and emerging, yet does not coincide with what is desirable. This would be a solution is still unsatisfactory and inadequate. In fact, despite the

appreciable changes in the composition and function, clearly Note recognized by the Pontifical Council, 10 the G20 fully responds to the logic of what should be the United Nations. The States that make up the G20 can not be considered representative of all people. Although expanded, the G20, as is well known is not the UN, it is Always an informal forum and limited to, among other things, shows losing effectiveness is more expanded. At the present state of things, the G20 lacks legitimacy and a political mandate from the community International. To this we must add that, not changing the situation, risks replace or to de-legitimize the de facto international institutions as the International Monetary Fund, World Bank - which, although need for radical reforms, are able to represent in a Institutional all countries and not their small number. What, therefore, should be done as soon as possible, the second also G20 leaders say the same, in the Final Declaration of Pittsburgh in 2009, is that you have to have a political thought more adequate and, finally, put his hand to the reform of the '"global architecture", be postponed to meet the needs of the common good of the 21 st century. It This, along "creative and realistic way, aimed at enhancing aspects positive institutions and existing fora, "11 improving them, so take that structure and mode of a typical universal jurisdiction, according to the principles of solidarity and subsidiarity, as well as representation. Surely these perspectives require caution and gradualism. Need to same time not give up the decision involves the pursuit of objectives of the implementation of which depends that of the global common good. Between these indicate: a) promote, in the context of institutions existing international - in particular the United Nations-, consistent also to their statutes, the junction between the political and economic sphere and Civil in world affairs, b) reform of existing institutions international institutions and in view of financial and monetary policies real world. It is therefore necessary to reflect changes on existing systems and on the possibility of achieving one or more institutions that carry out "the functions of a sort of "global central bank ', adjust the flow and the system of monetary exchange, like the national central banks, rediscovering the underlying logic - the logic of peace, coordination and shared prosperity - which led to the Bretton Woods Agreements. In this reflection is crucial to the involvement of emerging countries and developing c) on regional plan, we need to promote a similar process, enhancing the role of existing institutions. At European level, for example, could be a reference to the European Central Bank, making, however, match proportionate political institutions, in view of a greater unity and effectiveness in decision-making. Prior to this is especially the recovery of the primacy of politics economy and finance. "We must - we read in the discussions here

presented - to recover the primacy of the spiritual and ethics, and, with them, primacy of politics - responsible for the common good - the economy and the finance. The latter should be brought within the bounds of their real vocation and their function, including social, given of their clear responsibilities towards society, to give life to markets and financial institutions that are effectively serving the person, are capable, that is, to meet the needs of the common good and of universal brotherhood, transcending all forms of economics and flat performative of mercantilism. "12 Consistent commitment of the political orientation of financial systems and money to establish the common good, are suggested by the Pontifical Council, by way 'of example, three possible ways forward: a) measures taxation of financial transactions, b) forms of recapitalization banks, c) distinction between ordinary credit and investment Banking. Europe compared to the second point, in these last days, has already expressed its positive opinion. Here, in short, some parts of the projects drawn up by reflections under consideration, and that should be taken not only by the most direct responsible for the common good at the national and supranational levels, from those that, especially in universities and cultural institutions, are called to form classes tomorrow's leaders. _____________________ 1
Cf BENEDICT XVI, Caritas in Veritate, Libreria Editrice Vaticana, Vatican City 2009, nos. 57 and 67. 2 cf. Pontifical Council for Justice and Peace, for a reform of international financial and monetary system in perspective a public authority to universal jurisdiction, the Vatican Press, City Vatican 2011, pp.. 7-19. Cf 3 Ib., P. 18. 4 Cf BENEDICT XVI, Caritas in Veritate, Library Editrice Vaticana, Vatican City 2009, No 67. For a 5 cf reform of international financial and monetary system, pp. 24-25. 6 Cf for a reform of the financial system and monetary International, p. 29. 7 Cf Ib., Pp.. 26-27. 8 The International Monetary Fund and World Bank, if initially have been able to respond to the scene after the Second World War II, seem to have gradually lost the mandate and vocation

Universal implicit to the Bretton Woods agreements of which were the result. In Ultimately, the International Monetary Fund and World Bank have not been able to meet its objective of monetary and financial stability, and an appropriate economic development, so that they would win or at least significantly scaled situations of poverty and inequality; indeed, often have increased, contributing, however, a significant its international credibility. 9 Cf for a reform of the International Monetary and Financial System, pp. 27-28.

Cf To reform the international financial and monetary system, pp. 30-31. 11 Ib., Pp.. 31-32. 12 Ib., pp. 33-34.

[01489-01.01] [Original text: Italian] • STATEMENT BY PROF. LEONARDO BECCHETTI • The good thing about crisis is that they are both moments of great opportunities. The global financial crisis is an opportunity to reform the architecture of the global financial system, strengthen the European Union by point of view to the harmonization of fiscal policies and farther quickly towards the goal of political unity, increase discipline fiscal policy nazionali.Il Vatican document focuses on two key issues: i) build a framework of rules of global governance that if can make a frame for the action of global institutions; ii) reform the international financial system with a series of proposals specifications. On the first point, the global governance is urgently needed to overcome the asymmetry of the globalization of markets and global institutions and rules that remain predominantly national. Globalization makes us increasingly interdependent and makes it virtually impossible to ignore the problems of other countries once far: stabunt simul simul cadent. Only a few examples, there are six fundamental elements interdependence of economic and financial systems: i) the debt crisis American is a problem that concerns not only that country but savers around the world who invest in it and among the first large states such as China invested in Treasury securities a substantial portion of their reserves; ii) the debt crisis and the likely reduction of Greek nominal value government securities in the country (between 20 and 60 percent) will set losses on banks' balance sheets had more French and German invested in such financial assets, iii) the presence of an enormous mass of

poor and underprivileged in the world, are willing to work at wages much lower than those of our workers of equal status, protected and unionized, represents a formidable threat to maintaining of well-being of the high-income countries, iv) the exit from the euro would serious damage not only to developing countries but also for Germany itself, which for years has enjoyed the advantage of being able to export their goods to market countries of the eurozone without the cost of its rate of appreciation return v) the coordination of central banks is now increasingly important in a globally integrated world and developing countries have complained several times expansionary monetary policies recently that the U.S. central bank and European (quantitative easing) exported inflation in their countries, vi) for some time in the meetings of the G-20 seeks to coordinate policies the deficit countries and surplus ones trying to encourage the latter to to adopt more expansionary policies to boost demand at the world. There is a big table full of diners who have available long spoons. The difference between hell and paradise in this familiar story In the first case is that the guests use spoons groped clumsily Take yourself to no avail while the latter use them to take the other. It 'just this situation in front of which is are nation states in globally integrated markets. Try to pursue their own short-sighted short-term interest becomes even counterproductive because it is only by cooperating together that you can exit by the crisis. On the second point (the rules of financial markets) the document is its some proposals already launched by the Dodd-Frank legislation in the United States and the Vickers commission in the United Kingdom, not yet implemented and came into force for a number of obstacles. And 'return key finance the real economy. To this is necessary: i) reduce the leverage of banks too big to fail (lever 30 to 1 and imbalance between current liabilities and long academic activities are among the main causes of the spread of the subprime mortgage crisis in World). ii) to adopt the so-called Volcker rule that prevent banks from making proprietary trading with customer deposits. iii) more strictly regulate the derivatives market that arise as insurance instruments. Insurance policies in the real economy is buy if you own the underlying asset and to ensure financial markets that takes place in no more than 5 percent of cases. There is In this regard a proposal for the EU to achieve this goal

As regards credit default swaps on government bonds. A fourth proposal concerns the establishment of a tax on transactions Financial for the reasons explained in the paragraph that follows. It 'should ask why the position of economists and civil society (a majority in favor of the EU) against tax on financial transactions has changed dramatically over the recent years. Last year, 130 economists have signed an appeal in Italian his favor that have been gathered together in the same economists Appeal 1000 of 53 countries delivered to the finance ministers of the countries of G20in Summit held in Washington on 14 and 15 April 2011 (figures are among the signatories of close-up Dani Rodrik, Tony Atkinson, Joseph Stiglitz and Jeffrey Sachs) (Http://www.guardian.co.uk/business/2011/apr/13/robin-hood-tax-economistsletter). There are two reasons for this change of opinion: the events of the crisis global financial and more evidence on the subject that has helped to overcome some prejudices. With the global financial crisis of public finances some of the major Western countries have been severely weakened by save the banks and subsequently became the new target speculative attacks. A part of the financial world has so privatized profits, socialized losses and subsequently used public funds used to save his own against them saviors. And 'understandable therefore, that the majority of public opinion is of the opinion that those who work financial markets should help pay the costs of this crisis, sheltered hours on the most vulnerable. From this point of view the FTT responds to an elementary requirement of justice and is even given the urgent recent events to maintain social cohesion in the Community. The second reason for the increased fee was established by passing injury. Until recently it was considered that it was not if applicable penalty of global capital flight from the country decided to put it into force. This bias is unfounded because there are at Today, as documented in a research project of the International Monetary Fund, many as 23 countries that unilaterally apply the fee (no more than a fixed branded) without there having been no capital flight (T. Matheson, Taxing Financial Transactions. Issues and Evidence, IMF WorkingPaper No 11/54, March 2011, 8). The country with the highest charge is the United Kingdom StampTax Duty applies to a single type of asset (tax 5 per thousand of the holders of shares listed on the London Stock Exchange). The fee allows you to raise about 5 billion pounds a year. Because of

This evidence Barroso proposed the introduction of the tax at EU level speaks of "harmonization" of European-level taxes on financial transactions and not of their introduction. Just the tax London has generated an interesting example of avoidance: not to pay a fee operators have exited the stock market to build new OTC derivatives (contracts for differences) which consist of bets on changes in share price. Interesting to note, therefore, that the tax separated into two different markets really interested in investing in equity securities of companies and operators that play on variations short prices. This type of avoidance is already implicitly considered in Barroso's proposal to extend the taxation of derivatives (and thus also to contracts for differences). They can also be countered by banning The contract for differences as it does on a secondary market is not as the United States. The scientific level, there are numerous works that measure the elasticity of the volume of transactions similar to the introduction of taxes coefficients showing fairly low and not likely to support the hypothesis of capital flight. Another reason for which the flight can not happen is that the very high frequency operations benefit from an advantage of proximity to the physical location of the bank from which the information in telematics (New York Times (2009): Stock Traders FindSpeedPays in Milliseconds). Move operations far from main markets would result in the loss of this advantage. Another objection is unfounded is the impact of tax cost of capital. To set the rate proposed by Barroso calculations models based on the capitalization of expected future asset values dimostrano che questo costo è pressoché nullo (vedasi ancora Matheson 2011). L'altra obiezione che la tassa diminuisca la liquidità dei mercati è anch'essa opinabile. How much cash do we need? Dean Baker in un suo commento sul tema dice che la tassa ci riporterebbe ai costi di transazione e alla liquidità di dieci anni fa, ovvero ad un periodo più florido di quello che stiamo vivendo La verità è che non esiste nessun evidenza certa sugli effetti della tassa sulla liquidità ma solo una serie di diversi modelli che trovano risultati opposti a seconda del tipo di microstruttura dei mercati finanziari e del modello di competizione ipotizzato tra gli intermediari. Riassumendo le quattro principali obiezioni all'istituzione della tassa (non si può imporre se non a livello globale, non ci sarebbe gettito per la fuga dei capitali, la tassa aumenta significativamente il costo del capitale, la tassa riduce la liquidità dei mercati) sono false o infondate o per l'evidenza dei fatti (le prime due) o per mancanza di prove (le seconde due). Per quanto esposto sopra la tassa sulle transazioni (pur non essendo ovviamente la panacea di tutti i mali) può rappresentare una tappa importante in quel riequilibrio dei rapporti tra istituzioni e finanza che può favorire le altre riforme auspicate per prevenire nuove crisi finanziarie dalla legge Dodd-Frank o dalla commissione Vickers nel Regno Unito (Volckerrule,

riduzione della leva degli intermediari too big to fail , penalizzazione nei requisiti di capitalizzazione per le attività più rischiose rispetto al credito ordinario) e il recupero di fiducia da parte della società civile nei confronti delle istituzioni finanziarie di cui abbiamo urgente bisogno.