Civil Society Key Recommendations
- Mechanisms for dealing with global imbalances are falling
The asymmetric impact created by exchange rate fluctuations in developing country economies should be acknowledged in trade and investment negotiations and agreements.
The FFD Review Conference should explore the institutionalization of credible mechanisms, to provide for orderly coordination among hard currency issuers. Such mechanisms should ensure the exchange rate stability needed by countries proportionately most affected by such fluctuations.
- Reform of the governance of the Bretton Woods Institutions
The reform of voting rights in the IMF and the World Bank has to reach beyond the minimalist steps that have been concluded at the Spring meetings, and result in a substantial increase in the share of votes held by the developing countries.
The countries of the EU, which are currently most over-represented, have to hand over shares to the developing countries. This includes a greater bundling of the European Constituencies. But the reform of voting rights ought to reach beyond a mere update of voting power to align it with economic weight.
A new voting system in accordance with the principle of double majority (every resolution has to be approved by the majority of the member states and a majority of the share capital) currently appears a pragmatic and better approximation to the one-country one-vote principle that must prevail in the norm-setting areas that they are claiming for themselves.
The wholly unjustified practice of the IMF Managing Director always coming from Europe and the World Bank President always coming from the USA, should be abandoned.
Awarding credits must not empower the IMF to impose conditions on the debtor countries that impede the achievement of the international development goals or even render them impossible. The IMF ought to eventually withdraw from development financing in the narrower sense. This also implies that its Poverty Reduction and Growth Facility be phased out.
- Avoiding financial crises requires global cross-border cooperation on supervision and regulation
Since the same governments that agreed to the Consensus sit on the FSF, Basel Committees, and other bodies that set standards and codes, immediate steps should be taken by them to open these bodies’ membership with the goal of achieving balanced, institutionalized and full participation by developing country governments.
Standards and codes should no longer be part of IMF and World Bank conditionality and surveillance.
There is a need to revamp the incentives structure within rating agencies so they produce more reliable assessments and introduce greater competition among what are few players. Proposals for a registry and oversight body could be studied in the context of the FFD Review Conference.
There needs to be greater global cooperation among supervisors and regulators in existing fora and institutions, and eventually through setting up inclusive and comprehensive fora that can provide an effective public sector counterpart to what is now a private international financial sector, spot problems early on and call for regulatory reform on emerging areas of risk.
- Fora for policy-making and dialogue with balanced representation
In the short term, ECOSOC should be given the political clout to play the role of a multilateral body in which international economic, financial and development policies are determined with all regions of the world being equally represented.