by Bhumika Muchhala, Third World Network Geneva, May 10, 2010
After introducing the basic aspects of the financial transaction tax, this presentation will focus on three aspects. First, the perspectives on the case for a financial transactions tax from a developing country point-of-view. Second, the views of G77 member countries in the General Assembly of the United Nations in New York. Third, the significance of other reports that will mention the FTT, besides the IMF draft report to the G20 of April 2010. The High-Level Taskforce on International Financial Transactions for Development (which has both developed and developing country members) as well as the follow-up to the June 2009 UN Conference will provide important analyses on the policy proposals and feasible options on tax schemes in the financial market.
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by Soren Ambrose, ActionAid International and Bhumika Muchhala, Third World Network, January 2010
The recent global financial and economic crisis has opened up new opportunities to mobilize resources for development finance and reform the structures of the global monetary system in a way that would eliminate distortions and benefit all countries. The recourse of the G20 in April 2009 to a call for a general allocation of Special Drawing Rights (SDRs) by the IMF – the first in a generation – persuaded many government officials
in developing countries, as well as advocates for development, that SDRs can be an effective tool not only for building reserves, but also for financing development and meeting urgent liquidity needs. The work of the UN Stiglitz Commission and the discussions around the UN Conference on the Global Financial & Economic Crisis
articulated significant support for expanding the scope of SDRs. While prudence would be required in utilizing SDRs, there is potential for using this resource, which costs nothing to create, in creative ways. Greater amounts of SDRs should be provided to developing countries, and the costs of converting them should be reduced or eliminated, particularly for low-income countries. The use of SDRs for a range of purposes, including for medium or long-term public investments, should be asserted and defended on an international level.
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A EURODAD and Third World Network report in cooperation with the Heinrich Böll Foundation, April 2010
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by Bhumika Muchhala, Third World Network
The creation of the IMF at the Bretton Woods Meeting in 1944 set out its mandate in the Articles of Agreement. The mandate entails international monetary cooperation, the growth of trade, exchange rate stability, a multilateral payments system and temporary financial resources to help members correct their balance of payments. At this historically renowned Bretton Woods Meeting, the British delegation, led by Keynes, had
a distinctly separate proposal from that of the United States for international monetary coordination.
Keynes proposed the bancor, a new international means of payment, for transactions between central banks, whose supply would increase with the expansion of world trade.
The objective was to avert a return to the deflationary rules of the gold standard and facilitate expansionary economic policies that would enable full employment, which would have been the mandate of the institutions Keynes laid out to manage the bancor, called the International Clearing Union.
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by Bhumika Muchhala, Third World Network 2009
There is a growing international consensus in support of reform of the governance, accountability, and transparency in the Bretton Woods Institutions and other non-representative institutions that have come to play a role in the global financial system, such as the Bank for International Settlements, its various Committees, and the Financial Stability Forum.
These deficiencies have impaired the ability of these institutions to take adequate actions to prevent and respond to the crisis, and have meant that some of the policies and standards that they have adopted or recommended disadvantage developing countries and emerging market economies. Major reforms in the governance of these institutions, including those giving greater voice to developing countries and greater transparency are thus necessary. For the IMF, serious consideration should be given to restoration of the weight of basic votes and the introduction of double or multiple majority voting.
Our other key recommendation is that the IMF should not be the primary and dominant vehicle to disburse financial assistance for crisis-affected countries. Other regional and national arrangements, such as the Chiang Mai Initiative in East Asia, and the Bank of the South in Latin America, should be strengthened and used regionally and internationally where possible. Additionally, mechanisms such as international debt arbitration should be established to address the increasing debt burdens of developing countries.
Additionally, regional efforts to augment liquidity should be supported. Regional cooperation arrangements can be particularly effective because of a greater recognition of cross-border externalities and greater sensitivities to the distinctive conditions in neighbouring countries.
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