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Re-shaping the Role of Bretton Woods Institutions. New Progress, New Trends, New Challenges, and New Directions By ZOU Jiayi World Bank Executive Director for China11. Overview.
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Re-shaping the Role of Bretton Woods Institutions New Progress, New Trends, New Challenges, and New Directions By ZOU Jiayi World Bank Executive Director for China11
Overview • Strengthening global economic governance is a logical and critical response to the development challenges in the context of far-reaching globalization. • BWIs remains important pillars of the global economic governance in terms of global aid architecture and international financial architecture. • Since Monterrey Conference, new progress achieved, new trend developing, new challenges emerging, calling for new directions of BWIs.
New Progress in BWIs • Major Progress in World Bank • Successful IDA15 Replenishment • US$ 41.6 billion for IDA15 in total, representing 30% increase over IDA14 in USD • 42% increase of donor pledges, the largest expansion in donor funding in IDA history • 5 new donors including China,Egypt, reflecting the increasing support from developing countries
New Progress in BWIs • Major Progress in World Bank • New strategic themes under inclusive and sustainable globalization • Help to overcome poverty and spur sustainable growth in the poorest countries, especially in Africa • Address the special challenges of states coming out of conflict or seeking to avoid breakdown of the state; • Develop a competitive menu of “development solutions” for middle income countries, involving customized services as well as finance; • Play a more active role with regional and global “public goods”; • Support advancing development and opportunity in the Arab World; • Foster a “knowledge and learning” agenda across the World Bank Group
New Progress in BWIs • Major Progress in IMF • A package of reform on quota and voice • To enhance the voice and representation of dynamic economies and low-income countries • Whole package to be accomplished by the 2008 Bank-Fund annual meeting • 4 countries got quota increase in the 2006 Singapore Resolution as the first step of the reform • Review on quota formula as the second step is underway. • Preliminary consensus on four major factors of the formula: GDP/Openness/Variability/Reserve • Refocusing and modernizing the Fund • Working on Fund’s program with comparative advantage • Developing a sustainable income model • Lower administrative costs
New Trends in Development • Rapid economic growth in developing countries over recent years, leads to larger role of developing countries in global economy • Unprecedented close international economic linkage brings about enhanced economic benefits and tensions in globalization • Implies new demand and new challenges to global economic governance system
Challenges in General • Need for an effective global resource transfer system to support achieving MDGs • Need for a more stable, reliable, and predictable international monetary and financial environment for developing countries • Need for sufficient supply of Global Public Goods • Need for a balanced, effective global governance system to coordinate different interests of countries of different development stages and enhance common interests
Challenges At Current Stage • Challenges in resource transfer: commitment to ODA as a whole is not increasing • Challenges in international financial architecture • Financial supervision: innovation V.S. stability • Flaws in international monetary system posing extra external risks on developing countries • Excessive global liquidity • High inflationary pressure • Dollar depreciatio • High oil/food price • Structure Adjustment of globalization • Global imbalance and its correction • Decoupling issue • Developing and developed countries adjustment alike
Direction toward Future • Implications to World Bank • Stress on mobilizing development resources • Innovations on financial products, business scope, operational modality, and development paradigm • New-type development partnership with developing countries as facilitator of North-South, South-South and regional cooperation • Bigger role as knowledge Bank, stay at the cutting-edge of development knowledge from both developed and developing countries • Mainstreaming the Global Public Good issue • Look into interactions between developed countries policies and developing countries policies
Direction toward Future • Implications to the Fund • Focus on systemic issues in global level rather than national level • Look into financial innovations and global level regulation • The role in promoting the consistency of the macro-economic policies of developed countries • Promote the reform of international monetary system • Role of SDRs