Financial Post Articles
"The global economy cannot sustain forever chronic disruptions that spread contagion like wildfire. We must move from crisis management to crisis avoidance."
This call for action came from Finance Minister Paul Martin in a speech Wednesday to the University of Toronto's G8 Research Group.
The minister recalled the Mexican peso crisis and how, at the time, it turned the attention of world leaders to preventing such a meltdown from happening again. That attention focused on the International Monetary Fund. The resources at the IMF's disposal were increased in order to aid nations in economic difficulty. The IMF's early warning system was to be enhanced by increasing the transparency of governments' accounts and economic conditions. Finally, financial institutions were supposed to come under closer scrutiny. And yet, here we are, almost three years after the Mexican crisis, sweeping up the debris of the latest implosion -- this time in Southeast Asia.
Martin believes we can do better and feels the central challenge is to make domestic institutions and regulations effective and transparent.
In his words: "Ineffective or inadequate laws, the absence of sufficient supervision of financial institutions and banking systems, the presence of pervasive economic crime ranging from money laundering to bribery and corruption -- all of these inhibit investment, destabilize individual economies and -- as we have seen -- can ricochet and destabilize international markets."
Martin's emphasis on prevention is the right one -- now he and his peers must deliver.
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