Trichet: Global governance is of the essence to improve decisively the resilience of the global financial system
26 April 2010
Speaking at the Council on Foreign Relations in New York, Trichet stressed that both sides of the Atlantic have a very important responsibility in implementing effective global governance in many domains but in particular in prudential and accounting rules.
Speaking at the Council on Foreign Relations in New York, Trichet stressed four points:
· First, global governance is of the essence to improve decisively the resilience of the global financial system.
· Second, a characteristic of the recent turbulences is not only that they displayed a high level of unpredictability but also an extreme rapidity in the succession of events characterising the unfolding of the crisis. Global governance today must demonstrate a capacity to coordinate with agility and, where necessary, to decide extremely swiftly.
· Third, the crisis has had some paradoxical effects: on the one hand it has unleashed a tendency to reengage in financial nationalism if not mercantilism; on the other hand it had contributed to the recognition that a very high degree of interdependencies between economies called for a much higher level of cooperation. These two opposing forces are presently competing. It is imperative that effective global governance preserve the level playing field which is indispensable to foster global stability and prosperity. It is a major challenge. Both sides of the Atlantic have a very important responsibility in this respect in many domains, in particular in prudential and accounting rules.
· And fourth, the crisis has driven an historic change in the framework of global governance. This transformation was overdue. But there are two immediate reasons for this change. One is positive: the emerging economies are now economically and financially so important and systemically so influential that they must have a full and proper ownership of global governance. But the second reason is negative: the industrialised countries have proven particularly clumsy in their handling of global finance before the crisis at the time when their responsibility in global governance was obviously overwhelming. There was therefore no reason to confirm their exclusive prime responsibility. This calls for the industrialised countries to be now particularly irreproachable in the delivery of their present and future contribution to the stability and prosperity of the global economy within the new, more inclusive framework.
© ECB - European Central Bank
