New banking rules must be non-discriminatory – WTO Director-General Pascal Lamy
DIRECTOR-General of WTO, Pascal Lamy told the Conference on the New Global Trading System in the Post-Crisis Era in Seoul on 7 December 2009 with respect to post-crisis banking rules that “it is important that re-regulation be applied in a non-discriminatory manner, avoiding any form of “re-nationalization” of lending.” He said that “countries that have provided support to banks should be able to exit support as the de-leveraging process takes place, in a manner that ensures a level playing field between national and foreign-owned institutions.”
Mr Lamy said,
Policy-makers faced four major challenges.
++ First, it was essential to stabilize the financial system, which had moved from facing a liquidity crisis to a solvency crisis.
++ Second, governments needed to develop stimulus packages to support a tumbling demand.
++ Third, it was essential to contain protectionist pressures.
++ Fourth, financial regulation was widely seen as being in need of reform. The financial crisis had been triggered by too many incentives for taking ill-considered risks, but also because of the inability of supervisory authorities to properly regulate the financial system domestically and internationally.
The poorest countries have been hit hard by the crisis. In particular, capital flows to developing countries have contracted sharply as a result of the global credit crunch, from 9 per cent of their GDP on average to a mere 2.5 per cent. This is affecting capital accumulation, and hence growth, in countries that need capital the most. It is also limiting investments in trade-related infrastructure that would expand poor countries' capacity to trade in the future.
We have a collective responsibility to ensure that the poorest countries do not lose access to capital and product markets. In the short run, there is certainly a role for international financial institutions to close some of the financing gap. The second WTO global review on Aid for Trade held this year concluded that an increasing share of international aid was directed towards trade-capacity building of the poorest WTO members. In the medium term, this effort should be maintained to make sure that the poorest countries keep up with the infrastructural requirements for trade.