This update provides a snapshot of the publications and social media activities of the South Centre during the month of September 2018.
The Causes of Currency Turmoil in the Emerging Economies
Many emerging economies and developing countries are facing strong economic headwinds. Currency depreciation pressure is mounting for some countries. Argentina and Turkey are coping with currency crises, massive capital outflows and hyperinflation. To say their crises are completely self-inflicted is not correct. The exogenous shocks have played an important role. Other emerging economies and developing countries as a whole should be vigilant and try to defend their currencies and maintain financial stability. It is also high time to try to fix the flaws in the international financial system.
Renewed crises in emerging economies and the IMF ‒ Muddling through again?
As recognised by the International Monetary Fund (IMF), the global financial safety net including international reserves, Fund resources, bilateral swap arrangements, regional financing arrangements is “fragmented with uneven coverage” and “too costly, unreliable and conducive to moral hazard”. Given the aversion of emerging economies to the IMF and unilateral debt standstills and exchange controls, the next crisis is likely to be even messier than the previous ones. Some countries may seek and succeed in getting bilateral support from China or some reserve-currency countries according to their political stance and affiliation. In such cases, crisis intervention would become even more politicised than in the past and a lot less reliant on multilateral arrangements. By failing to establish an orderly and equitable system of crisis resolution, the IMF may very well find its role significantly diminished in the management of the next bout of crises in emerging economies. In other words, multilateralism, however imperfect, could face another blow in the sphere of finance after trade.
Title: Revolution Required: G7 Policies and Their Implications for Global Stability and Growth
Date: Friday, 13 April 2018, 15H-18H
Venue: Room XXII, United Nations, Geneva
Organizer: The South Centre
Title: G-24 Technical Group Meeting
Date: 27-28 February 2018
Venue: Colombo, Sri Lanka
Organizer: Intergovernmental Group of Twenty Four
How international investment agreements have made debt restructuring even more difficult and costly
International investment and trade agreements are legally binding international treaties which give investors an additional layer of legal protection on top of the host country law and contract law. However, little efforts have been made in ironing out the interface between these different laws and treaties. Inconsistencies and even contradictions have emerged in dispute settlement decisions, sometimes at the expense of public good, sovereignty and financial and economic stability. An asymmetry seems to exist in the allocation of risks and benefits between investors and recipients of investments. (more…)
Playing with Financial Fire: A South Perspective on the International Financial System
Playing with Fire (PWF) is a continuation of the analysis of the integration of Emerging and Developing Economies (EDEs) into the international financial system which Yılmaz Akyüz has carried out in his roles as senior economist for many years responsible for UNCTAD’s Trade and Development Report and Chief Economist at the South Centre. The treatment covers cross-border financial flows, increased commercial presence of foreign financial institutions in EDEs and their increased participation in their local financial markets as well as policy and regulatory issues. PWF deploys data on major cross-border financial flows on a gross as well as a net basis. This innovative approach facilitates identification of financial stability issues posed by the increased participation of EDEs in international financial markets.
China’s Debt Problem and Rising Systemic Risks: Impact of the global financial crisis and structural problems
The fast expansion of China’s debt, in particular corporate and local government debt, has attracted international attention and has also become a major concern of China’s policy makers. Even though China can tolerate a higher debt level than many other emerging and developing economies owing to the sheer size and other special features of the Chinese economy, systemic risks for financial stability have been rising since the global financial crisis and the cushions built in the past decades to withstand a higher debt level have also been weakened. (more…)
South Centre Statement for the UNCTAD Intergovernmental Group of Experts on Financing for Development
Below is the statement by the South Centre during the first session of the UNCTAD Intergovernmental Group of Experts on Financing for Development (IGE Ffd) held in Geneva on 8-10 November 2017.
Title: “Another Crisis in the Making?” Book Launch of Dr. Yilmaz Akyuz’s Playing with Fire,
Deepened Financial Integration and Changing Vulnerabilities of the Global South
Date: Friday, 10 November 2017, 13h00-15h00
Venue: Room XXII, Palais des Nations, the United Nations Office in Geneva
Organizers: The South Centre
South Centre Statement to the Ministerial Meeting of the Group of 24
Below is the statement by the South Centre’s Executive Director Mr. Martin Khor which was distributed during the Ministerial Meeting of the Group of Twenty-four held in Washington DC on 12 October 2017.
The Financial Crisis and the Global South: Impact and Prospects
The world economy has not still recovered from the effects of the financial crisis that began almost a decade ago first in the US and then in Europe. Policy response to the crisis, the combination of fiscal restraint and ultra-easy monetary policy, has not only failed to bring about a robust recovery but has also aggravated systemic problems in the global economy, notably inequality and chronic demand gap, on the one hand, and financial fragility, on the other. It has generated strong destabilizing spillovers to the Global South. (more…)