Tony Blair should mobilise world leaders to set up a World Financial Authority to deal with the worsening global crisis, according to a report published by the Institute for Public Policy Research.The report calls for a body to help develop policies to manage risk in the unstable world economy. Its objectives would include a requirement to pursue policies to maintain high rates of growth and employment.
The new body would also be given the responsibility of ensuring transparency and accountability on the part of international financial institutions such as the IMF and the World Bank. The WFA would provide the regulatory framework within which the IMF would develop as an effective lender of last resort.
The report also calls for the World Bank to refocus its lending activities towards poorer countries unlikely to get access to open credit markets, subject to the oversight of the new WFA
The new analysis says that over the past year the persistent economic crisis in Asia and around the world has called into question the notion that liberalisation has enhanced the economic contribution of international capital markets.
Report co-author Lord Eatwell said: ‘The current global crisis, stemming from the Asian meltdown has demonstrated beyond all reasonable doubt that the international financial system is not working.”
‘International Capital and the Future of Economic Policy’ is available free
from the IPPR on 0171 470 6107.