The Call for Action is timely and well-judged

Read the Call to Action

In the early post-crisis phase, there were signs of an exciting new dynamic in global policy-making. The switch from the G7 to the G20 as the centre of economic decisions promised a new era, with all the world’s major economies now inside the tent. The Financial Stability Board was renamed and reinforced as the nerve centre of financial surveillance. A tough new capital regime for banks was agreed in short order.

But that was then. Now progress is much slower. More recent summits have been disappointing: the Cannes meeting was overshadowed by the continuing Greek crisis. There are clear signs that domestic political imperatives have come to the fore, and the interest showed by global leaders in addressing the tougher issues of global economic co-ordination is much reduced. Some of the more forward-looking ideas of the French G20 Presidency, on the reform of the international monetary system for example, have made little headway.

Perhaps sit was ever thus. Old heads shake and say wise things like “all politics are local”. But it would be a great pity to accept that nothing can be done. That is a counsel of despair. In the financial area, which I know best, there are areas where more could be done. The Financial Stability Board could be further strengthened and given institutional form. That was an almost-hidden conclusion at Cannes. It should be pushed forward. The future of international accounting standards  is also of crucial importance. Why can the US SEC not agree to their implementation in the US?

A more engaged  transatlantic dialogue on financial regulation is also needed. There are danger signs of the US and the EU going separate ways on important issues like rating agency regulation, derivatives trading and future banking structures. (Dodd-Frank in the States, and Vickers in the UK offer very different prescriptions).

More urgency in these dossiers would be welcome. It would complement progress on some of the other issues highlighted in the Call for Action, especially related to the resolution of the eurozone crisis, which of course is the most critical issue we face today.