ECOSOC SPRING MEETING WITH BWIS, WTO, AND UNCTAD
Thematic Debate on Building and Sustaining Solid Financial Markets
NEW YORK, 14 APRIL 2008
With alarm bells going off for possible recession in the global economy, this is a most opportune time for us to reflect on building and sustaining solid financial markets globally. Our meeting is a clear recognition of the limitations of current international trading and financial arrangements. Often these arrangements put developing countries at a great disadvantage. Corrective measures are absolutely necessary.
Recent financial crises underline the severe handicaps that, until now, have plagued the development efforts of developing countries. In these situations, middle-income countries in particular often have to negotiate major liquidity hurdles. This is the unfortunate price that middle income countries have had to pay for being integrated into the global economy. They are more vulnerable to the problems of international trade and the volatilities of international capital flows.
The appropriate response to these challenges cannot of course be withdrawal. Instead, they must fashion strong macroeconomic policies that allow them to absorb external shocks while remaining resilient.
Beyond that, they must also attend to the need for sustained capital flows when international markets are overtaken by adverse financial conditions. The answer lies in the development and use of financing mechanisms, such as growth-linked bonds, that will ensure access to capital no matter the external conditions.
More importantly, steps will have to be taken to develop some degree of financial self-reliance. Domestic resources are after all the foundation for self-sustaining development. Mobilization of these resources requires the existence of sound institutions that facilitate national development processes. Herein lies the justification for the establishment of strong equity and bond markets, domestically and regionally.
Indonesiais on this path. Within our region generally, the Asia Pacific Economic Community (APEC) has launched initiatives to strengthen domestic financial markets and to promote greater financial stability. In addition, the ASEAN Roadmap for financial integration endorses capital market development and commits member countries to cross-border cooperation in financial matters. Also the Asia Bond Fund has been launched.
In the international level, it is because of lack of transparency, accountability, adequate regulation and adherence to proper underwriting standards that the sub-prime crisis has occurred. On that basis, the need for good governance, greater inclusiveness and information-sharing at the international level is undeniably clear.
Against this background, Indonesia would appeal for the continued support of the international community and for a deepening of multilateral development cooperation in this regard. Domestic responses must be reinforced by international action.
I thank you.
Permanent Mission of the Republic of Indonesia to the United Nations, New York
325 East 38th Street, New York, NY, 10016, USA
Tel: 1.212.972.8333, Fax: 1.212.972.9780 - www.indonesiamission-ny.org