The panelists pointed out that especially developing countries need a clear framework and concrete guidelines to develop their financial sectors in a sustainable way and to be assured of a healthy international financial system.
Summary text prepared by the lead organizer of the session: Friedrich-Ebert-Stiftung (Friedrich Ebert Foundation). The views expressed are those of the author and do not necessarily reflect the views of UNCTAD. |
The recently launched report on the Post-2015 Development Agenda by the UN High-Level Panel mentioned sustainable finance as one of the cornerstones of future development.
The report, however, neither elaborates on the reform steps needed to stabilize the global financial system nor on the specificities of finance for development. Although it mentions some international institutions as facilitators of a successful development agenda, neither the Bretton Woods institutions nor alternative agencies are part of the report.
The panelists pointed out that especially developing countries need a clear framework and concrete guidelines to develop their financial sectors in a sustainable way and to be assured of a healthy international financial system.
Mr. Ugo Panizza advocated an institutionalized mechanism to efficiently deal with sovereign debt defaults as part of such a system. Increasing feasibility of a debt default might imply higher lending costs for a country in crisis, yet the costs of a delayed sovereign default are even higher.
Mr. Chukwuma Charles Soludo made a strong case for the consolidation of the domestic financial sector as an essential foundation of sustainable development. The reform of the Nigerian banking system showed that a strong domestic financial sector is crucial for stimulating investments in infrastructure and domestic industries. The private sector was thus enabled to form an active part in the country's development.
Mr. Soludo put emphasis on the self-responsibility of developing countries' governments and central banks and concluded: "If you want development, ownership matters!"
Similar views were held by Mr. Yurendra Basnett. He demanded for the post-2015 development agenda to deal with the drivers for investment in infrastructure and the productive capacity of developing countries. He sees public goods as a decisive investment area for development.
Mr. Abul Barkat gave an overview of the prospects for the BRICS development bank as a possible alternative to the Bretton Wood institutions, and its potential to balance conditionality. Whether this bank will reach the size to make a difference and to be more than just a competitor will have to be seen.
Altogether, the breakout session provided valuable insights into pillars of a prospective financial framework but also illustrated the challenges that still have to be overcome.
Speakers:
- Mr. Abul Barkat, Professor of Economics, University of Dhaka and Chair, Janata Bank, Bangladesh
- Mr. Yurendra Basnett, Research Fellow, Trade, International Economic Development Group, Overseas Development Institute, United Kingdom
- Mr. Chukwuma Charles Soludo, Chair, African Heritage Institution and Former Governor, Central Bank of Nigeria
- Mr. Ugo Panizza, Professor of International Economics, Graduate Institute of International and Development Studies, Geneva
