Global Financial Organizations
- Part II
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Global Financial Organizations
|Part 1|Part 2|Global Financial Organizations - The IMF. World Bank. The G-20. Bank for International Settlements. The main financial organizations during the GFC. See their effect during the GFC.
3 – Group of Twenty (G-20), Group of Seven (G-7) -(Souce: Marcin N) - G-20 Member Nations – 2007 -
G-7 Finance Ministers and other Leaders of Global Finance – 2006 -
10) Birthyear: G-20 – 1999; G-7 – 197611) Birthplace: G-20 – Berlin; G-7 – France 12) Purpose of Birth: The Group of Twenty Finance Ministers and Central Bank Governors (G-20) was born to bring together financial leaders of the 20 most industrialized or 'developed' nations in the global financial market to discuss key economic issues affecting the world. The official word from the G-20 is: “The G-20 was created as a response both to the financial crisis of the late 1990s and to a growing recognition that key emerging market countries were not adequately included in the core of global economic discussion and governance.” The G-7 existed over 20 years before the G-20. Prior to the G-20, the G-7 engaged in dialogue, yet considering the G-7 had such a small number of members relative to the number of possible members for such global discussion, the G-20 was created. There is also the G-8, although this group is still less than half the size of the G-20 and is a political group, not a financial group. Two other global financial groups (organizations) – the G-22 and G-33 met in 1998 and 1999 respectively, though they were not established groups. These larger meetings between the G-22 and G-33 included many emerging markets and the discussions prompted the establishment of a fixed global finance group – the G-7 (+) emerging markets (+) other industrialized nations – hence, the Group of Twenty was born. The G-20 was born as a solution to the Asian financial crisis of 1998 and may be increasingly called upon to provide solutions to the GFC of today - the global financial crisis. Global Financial Influence: The Group of Twenty includes financial heads from the 20 most industrialized nations – the G-7: Germany, Japan, the United States, the United Kingdom, Italy, Canada, and France (+) the European Union: Austria, Belgium, Bulgaria, Cyprus, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Poland, Portugal, Republic of Ireland, Romania, Slovakia, Slovenia, Spain, Sweden, and the United Kingdom (all of which count as a single member) (+) South Africa, Mexico, Argentina, Brazil, China, Japan, South Korea, India, Indonesia, Saudi Arabia, Russia, Turkey, and Australia (+) the IMF Managing Director, the President of the World Bank, and the Chairs of the International Monetary and Finance Committee and Development Committee of the IMF/WBnk. The Group of Twenty equals – (1) 90 percent of global GNP (gross national product – the sum of goods produced within the borders of a nation), (2) 80 percent of global trade, and (3) two-thirds of global population. 13) Role in the GFC: Well, thee group apparently is the GFC. Each member, from emerging market to industrialized nation is playing a significant role in the GFC, right now. The GFCzone asks this question – how effective are these global financial group meetings? The G-20 says: “To tackle the financial...crisis that spread across the globe in 2008, the G-20 members were called upon to further strengthen international cooperation.” There seems to be a question as to what degree international cooperation equals international action and influence in the global financial market. Former British Prime Minister Gordon Brown spoke words following a G-20 meeting in 2009 that suggested the meetings would bring about sweeping reforms. Thus far, it appears the group or at least the nations represented in the group have had an far-reaching influence in the global financial market, because although Brown speaks as if the global financial crisis during that time (around 2008) was clearing, not many months after he stepped from the podium the world entered into the 'next' global financial crisis. Again, it would seem that the group, when cooperating as Brown describes in his speech, could spawn effective international action and influence. Here is Right Honourable Gordon Brown MP, former Prime Minister of Britain, speaking on April 2, at the London Summit in 2009 following the G-20 conference: (Excerpted from Born to Die: Rising from the Explosion of the Global Financial Time Bomb) “Can I welcome you to this conference following our G-20 summit. This is the day that the world came together to fight back against the global recession…with a plan…for reform…and our message today is clear and certain - we believe that in this new global age, our prosperity is indivisible, we believe that global problems require global solutions, we believe that growth - to be sustained - must be shared…the old…is over…today we have reached a new consensus. That we take global actions together to deal with the problems we face…that we will take essential action to rebuild confidence and trust in our financial system… First of all, for the first time we have come together to set principles to reform the global banking system…we have agreed that international accounting standards will have to be set… Secondly, we will clean up the banks so they will [extend loans] to families and businesses… Third…since our last meeting in Washington and as part of this process from Washington, G-20 countries have announced and are now implementing the largest macroeconomic stimulus the world has ever seen. We are in the middle of an unprecedented fiscal expansion, which will by the end of next year amount to an injection of five trillion dollars into our economies and it will save or create millions of jobs… In addition to the dramatic interest rate cuts, our central banks have pledged to maintain expansionary policies…as long as they are needed, using the full range of options available to them… We will treble the resources of the International Monetary Fund itself with up to an additional five-hundred billion dollars. Fourth, alongside these extra resources we will ask the international institutions to strengthen their independent surveillance of the world economy… Fifth, we are going to act decisively to kick-start international trade. Trade is a crucial driver of growth in the global economy…this time of financial crisis is no time to walk away from our commitment to the world’s poorest. So when people are suffering and yet it is within our capacity to help, we will not pass by on the other side. We remain firmly committed to meeting…our pledges on aid, and to deal with this crisis for the poorest countries, we have asked the International Monetary Fund to bring forward proposals to use the proceeds of agreed sales of gold to support low income countries… We have committed to building on this to work together to seek agreement on a post 2012 climate change regime at the UN conference in Copenhagen in December… When the Wall Street crash happened in 1929, it took fifteen years for the world to come together to rebuild and renew our economies. This time, I think people will agree, that it is different. We will not hesitate, as long as people are losing their jobs and their homes, to make the difference, we can, by improving their prosperity… Today the largest countries of the world have agreed on a global plan for recovery and reform. This involves the biggest interest rate cuts in history, the biggest fiscal stimulus we have ever seen, the biggest increase in resources in the history of our international institutions…and we have maintained our commitment to help the world’s poorest… This is not just a single collection of actions, this is collective action…I think a
new world order
is emerging and with it the foundations of a new and progressive era of international cooperation…We have resolved that from today, we will…secure responsibility from all…and we have agreed that in doing so, we will build…a fairer global society…Thank you very much…” There are at least two points that stick out well and appear to be manifesting in the global financial experience – (1) expansion, interest-rate cuts, stimulus or 'inflation' and (2) international cooperation or 'financial globalization'. There have been concerns over the ability of the Group to cooperate and manifest Brown's words. Furthermore, although there may be disagreements and cooperation may be slow or even stagnant, trends of increasing global interconnectedness seem to suggest that financial globalization, whether through the Group or global financial organizations of a different name, shall continue to reflect the trend of global interconnectedness that is active on a variety of levels. G-20 decisions have had impact – budget cuts, increasing transparency, advancing global financial standards of conduct, causing monetary stimulus, and increasing financial global governance – particularly IMF/WBnk powers. Further, if indeed the Group members are unable to cooperate, then this may lend more reason to defer authority to a global financial organization such as the IMF/WBnk, which has a greater global reach - as far as membership and greater global power – monetarily through loans, and fiscally through Structural Adjustment Programs. What we can say at this point is that global financial leaders are meeting - and even if they may be failing to cooperate in some eyes, the overall success of financial globalization may still continue through other attempts – furthermore, during these meetings, global financial leaders are exchanging ideas and plans for the global financial market and thus, can be a source of information and interest.
4 – Bank for International Settlements (BIS) - BIS Member Nations – 2009 -
(Source: David Croll) – Bank for International Settlements Headquarters
– Basel, Switzerland -
14) Birthyear: 193015) Birthplace: Basel, Switzerland 16) Purpose of Birth: Established in 1930 to administer Germany's reparations payment – mandated by the Treaty of Versailles following WWI – the Bank for International Settlements was created to settle the German war-deb. The Bank for International Settlements was also born to be the organization that settles the counterproductive financial differences and isolation amongst nations by promoting international monetary and fiscal cooperation. The BIS serves as a bank for central banks, henceforth, providing no financial services for the private sector. The BIS is a financial swiss army knife for the central banker – serving as a zone for dialogue and policy review, global financial research, and commissioning mediums or trustees for global financial transactions, for example. 17) Financial Influence: The BIS is a bank for central banks. By comparison to the International Monetary Fund, the Bank for International Settlements serves only the central banks and communicates only through international monetary authorities – having 56 central banks as members – whereas the IMF, which is another major global financial organization, serves mostly governments, operates through central banks and commercial banks, and also communicates only through international monetary authorities – having over 180 countries as members. Thus, the IMF is larger, more political, and more commercial whereas the BIS is smaller, more financial, and more selective. Central bank leaders meet at the BIS in Basel fairly frequently – once every two months. 18) Role in the GFC: The BIS's role in global finance has declined since shortly after following through on its initial purpose in 1930 – to administer Germany's WWI reparation payments. BIS prominence and credibility also were not enhanced by the controversy over the fact that from 1933 – 1945, men such as Walter Funk, Emil Puhl, Herman Schmitz, and Baron von Schroeder were on the BIS Board of Directors – all of these individuals were also involved with Nazi war crime (Nuremberg Trials, IG Farben, and Gestapo). In fact, around the mid-1940s, national political and financial leaders were calling for the Bank for International Settlements to be completely liquidated. Central bank governors heroically rescued the BIS because after all, by comparison to the IMF, the BIS is technically free from government membership – the BIS is the central bankers' global financial organization, not the government's. In 1948, after four years of delegation beginning in 1944 (when the IMF was born), calls for liquidating the BIS froze and sublimated. It seems, BIS death threats were only accented by its Nazi controversy, more prominent were questions of BIS usefulness in the same field as the IMF/WBnk. As previously mentioned, the Bank for International Settlements's role as a global financial organization has steadily declined since shortly after its birth (since it was 3-years-old), yet the BIS is the central bankers' bank – having assets amounting to SDR 210.9b ($410b) as of 2007 and from 2007-2011, approximately 4% of global foreign exchange reserves – SDR 148b ($224b) have been invested by central banks with the BIS. The BIS's role in the GFC primarily pertains to its official status as another global financial organization, at which global financial authorities converge. Simply stated, the BIS's role in the GFC is derived from the fact that many of the main players in the GFC – central bank governors, finance ministers, global monetary authorities – converge at the BIS.
5 – Moving Forward -19) What are we seeing? We are seeing that through the IMF/WBnk, G-20, G-7, and BIS, the heads of global finance, along with their political reflections, are able to converge and collectively mold global financial life on a fundamental level – even now, as we are reading into these organizations. 20) We may be seeing that, considering the global financial organizations are among the main monetary meridians for the planet, by glancing into the workings of these international monetary organizations we could be gaining insight into both the architecture and building-process of the global financial crisis. 21) The global financial organizations can be as useful a source of information on the global financial markets as your Global Finance Magazine, your Wall Street Journal, or your Barron's. 22) Watching developments in the global financial organizations can also be useful in foreseeing trend shifts in the global society. For example, if I notice strong activity between Asian central banks and the BIS as well as an increasing frequency of reports on Asian finance from the IMF, then I can slightly shift my actions to reflect what appears to be a growing influence of the Asian market. 23) Acting on trends in global society can also be vastly important in human relations. For example, foreseeing shifts in the Asian market can be significantly nullified as a source of gain if I am unable to speak the language or operate in the culture. For this reason, the global financial organizations can also be global societal organizations and watching their developments can lend insight into a growing need to be skilled in certain languages, such as (1) Chinese - the language of a booming global financial power, (2) French - the official working language of the United Nations (along with English) and common language in discussions about the Heavily Indebted Poor Countries of Africa, and (3) Spanish - the language of several uptrending commodities markets. 24) For many potential profit points, the global financial organizations known as the International Monetary Fund, the Group of Twenty Finance Ministers and Central Bank Governors, and the Bank of International Settlements can be quite useful.
On behalf of The Global FC Zone, Crisis to Profit. Roth
Sources -1) Barrons, Roth E. Born to Die: Rising from the Explosion of the Global Financial Time Bomb. 2) http://www.bis.org/events/agm2007/ar2007o.htm 3) http://www.imf.org 4) http://www.g20.org 5) http://www.wikipedia.org 6) Ross, Robert Gaylon. The Elite Don't Dare Let Us Tell The People. 7) Galbraith, John Kenneth; Salinger, Nicole. Almost Everybody's Guide to Economics.
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