The Road to Global Financial Stability and Economic Growth
Bretton Woods Committee 30th Annual International Council Meeting
On October 10, 2013, over 250 global financial and economic leaders gathered together for the Bretton Woods Committee’s 30th Annual International Council Meeting for a discussion themed “The Road to Global Financial Stability and Economic Growth”.
In the five years since the global economic collapse of 2008, a shared roadmap to help lead the worldwide community toward its desired destination – systemic and economic stability – remains elusive. Economic, regulatory and financial sector reforms are progressing, but may be taking divergent paths. Leaders considered whether the actions and incentives driving monetary and fiscal policies, regulatory reforms, and financial market participants are sufficiently aligned to sustain global economic growth.
During the program, panelists largely discounted current U.S. fiscal difficulties as a domestic political debate that would be resolved without a default on the debt, although the related anxiety was evident in frequent references to the importance of the stability of the world’s reserve currency. The U.S. Federal Reserve and other central bankers’ unconventional, accommodative monetary policies and tools, imposed to overcome financial sector and macroeconomic weakness, challenges that fiscal authorities have struggled to overcome, were far more prevalent in the discussions, as “tapering” was universally viewed as having a spillover risk unless done in a slow, thoughtful and coordinated manner. Otherwise even the slow growth forecast for advanced, emerging and developing economies was thought to be jeopardized.
Beyond the fiscal and monetary challenges and variations in how they are being addressed both domestically and internationally, there was general comfort with the financial reforms designed in response to the 2008 financial crisis as having improved the capital and liquidity positions of major financial institutions and thereby strengthened financial system stability. Satisfaction was expressed with the efforts of international organizations and multilateral forums, such as the Basel Committee on Banking Supervision (Basel) and the Financial Stability Board (FSB), to set reasonable standards and monitor their implementation for compliance, implications and refinement. The reforms not yet agreed upon, such as derivatives, remain a concern. Furthermore, cross-border resolution regimes and cooperation were focused upon as being particularly important, albeit quite challenging, to attain and sustain global financial stability.
The interrelationship of fiscal, monetary and financial policies and reforms were evident throughout event discussions about economic growth and financial stability. The individual national paths may diverge with respect to the specifics of implementation, but the direction and the destination appear to be universally understood by event speakers and participants. The deliberations were calm, but the resolve was nevertheless unmistakable.
Download the PDF of the compendium to review a summary of the day’s events.
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