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Le Canada et l’ONU > Newton Bowles Reports Ce document est disponible seulement en anglais.
ANNEX 4 Failing Currencies, Recriminations, Who's to
Blame? Financial Markets The world's financial markets have taken advantage in every way possible of the deregulated and uncontrolled monetary environment created during the past decade. Global currency transactions increased threefold between 1986 and 1992. As long as enormous profits can be made from the wild swings in exchange value between currencies, the volume of international monetary capital transactions will continue to grow. The extreme volatility and instability of the global financial markets are obvious. They are also dangerous. The frantic intensity of activities in the financial markets leads to unpredictability and thus contains all the seeds of economic instability. Recent history provides many examples of what can ensue. In 1982, Argentina, Brazil and Mexico and other developing nations defaulted on their debts to foreign banks. A decade later, the external indebtedness of all developing countries had more than doubled. In 1989, Japan's "bubble economy" of inflated financial values collapsed. In 1992, the British pound and the Italian lira came under successful attack, forcing them to devalue. The following year, it was the turn of the French franc and other European currencies. In 1995, Mexico collapsed anew and Japan was engulfed in a crisis of falling prices and falling debts. Ironically, the one bulwark against these disasters is government. Ironic because government is anathema to the advocates of the globalized economy. Yet, time and again, it has been government that has had to intervene in order to extinguish the fires inadvertently lit by the marketplace's misguided enthusiasm. Incidentally, government has had to play this role at a great cost to the taxpayer. Recently the debate on the pros and cons of globalization has intensified because of the unexpected instabilities in the economies of South East Asia, the heroes of the world economy during the last two decades. To a certain extent these instabilities were of their own making: too much reliance on real estate leading to real estate speculation, a hasty expansion of financial service industries leading to uncontrolled excess bank credits and weaknesses of the financial systems, a waste of savings on unproductive investment, an increasing imbalance between the expansion of the wealth-creating machine and investment raising the productive potential of society, insider profiteering, undisciplined monetary policies, inadequate fiscal policies and overvalued currencies. These imbalances have been sharpened by reactions from international markets. The market responses could be considered as excessive and, in part, aggravated by unscrupulous speculators, who had their way in a free-for-all, without suspension and without agreed rules and principles or agreed professional, ethical and behavioral standards and without clear disclosure requirements. |
