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Gewerkschaftskoordination International
Promoting Sustained Development
About New Rules for Global Finance Coalition
Analysis of Problems
Unstable and Insufficient Capital Flows
Distribution of Capital
Institutional Oversight
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About the New Rules Coalition
Started in 1999 in response to the Asian crisis with the objectives of
developing reform proposals for the global financial architecture and
preventing future financial crises.
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International Financial Architecture and
Development
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What progress so far
Progress to date on these issues has suffered serious problems
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Financing for Development (FfD)
•In this regard the Monterrey Consensus provided for the first time
an agreed comprehensive and balanced international agenda and an
on-going process, which should be used to guide and evaluate
reform efforts.
•New Rules will organize in close cooperation with the Financing for
Development Office (FFDO) a series of multi-stakeholder
consultations to examine issues, exchange information and promote
best practices in the area of systemic issues
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Key Problems: Unstable and
Insufficient Capital Flows
GDP
7 $250
Cap Flows, $billions
6
$200
5
$150
4
$100
3
$50
2
$0
1
0 -$50
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
Compares GDP of emerging market and developing countries including
selected advanced economies and capital flows of Emerging market and
developing countries including selected advanced economies.
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Gewerkschaftskoordination International
International Capital: Important But Not Dependable
7 $14
GDP
6 Cap Flows, $billions
$12
5
$10
4
$8
3
$6
2
$4
1
$2
0
81
19 2
19 3
84
19 5
86
19 7
19 8
89
19 0
91
19 2
19 3
94
19 5
19 6
97
19 8
99
20 0
20 1
02
03
8
8
8
8
9
9
9
9
0
0
-1 $0
19
19
19
19
19
19
19
19
20
20
-2 -$2
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Gewerkschaftskoordination International
International Capital: Important But Not Dependable
6 GDP $100
Cap Flows, $billions
5
$80
4
3 $60
2
$40
1
0 $20
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
-1
$0
-2
-3 -$20
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Gewerkschaftskoordination International
International Capital: Important But Not Dependable
9 $120
8 $100
7 $80
6 $60
5 $40
4 $20
3 $0
2 -$20
GDP
1 Cap Flows, $billions -$40
0 -$60
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
Developing Asia for capital flows defined to also include Hong Kong SAR, Korea, Singapore, and
Taiwan Province of China
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Some types of flows are more volatile than others
International Capital Flows: Latin Am
$70
FDI
$60 Portfolio
$50 Other private
Official
$40
$30
$20
$10
$0
-$10
-$20
-$30
-$40
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
Latin America was chosen because of incomplete data for other areas.
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Gewerkschaftskoordination International
Flows to some areas are more volatile than others
$80
Private Portfolio Inflows
$70
$60
$50
$40
$30
$20
$10
$0
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
-$10
-$20
-$30
-$40 Africa Cen Eur Lam Asia
-$50
-$60
Net private portfolio flows include the purchase of private equity shares (amounting to less
than 10% of firm) and debt securities debt (e.g. bonds). Measured in US$ billions.
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Some types of flows are too persistent
$800
Foreign Debt
$700
$400
$300
$200
$100
$0
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
Total foreign indebtedness in billions of US$
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Persistent debt and its legacy
Foreign Debt Service Payments
$180
$160
$140
$120
$60
$40
$20
$0
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
Principle and interest payments on total foreign indebtedness in billions of US$
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The Problem: Distribution of
Capital
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Capital flows are concentrated
Private Capital Flows
10 Year Average, $billion
Lam
Asia
Cen Eur
$38
Africa
$49
$8 $24
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Even FDI is concentrated
Foreign Direct Investment
10 Year Average, $billion Africa
Cen Eur
Asia
Lam
$54 $48
$9
$16
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The current status of international
finance and development
The current financial system is characterized by instability and
highly uneven distribution of capital.
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The Problem: Institutional
Oversight of Financial Stability
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Next Steps
Therefore,
The multi-stakeholder consultations on
Systemic Issues will focus attention on
institutions and policies that can result in
sustained development.
Changing the rules and the rule-making
processes is likely to require a different
mix of decision-makers.
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Core topics of the multi-stakeholder consultations
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Number and location of meetings
• Washington D.C., to ensure maximum participation from country
representatives and staff of World Bank and IMF
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Information on the Consultations
• The New Rules Coalition and the FFDO will welcome proposals,
queries and comments from interested entities and individuals from
around the world
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Thank you
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