Australia wants to work with the world’s economic community to secure
long-term solutions for global recovery, Treasurer Wayne Swan has told
a US think tank.
Addressing the Brookings Institution in
Washington ahead of a G20 crisis talks with finance ministers this
weekend, Swan said global cooperation to reach agreement and act
decisively would deliver “real safety for everyone.”
“Australia
wants to develop with the global economic community a coordinated
approach to these issues that delivers a long term solution not just a
quick fix,” Swan said.
He said the answer to the escalating crisis lies in better regulation, not more or less of it.
Acknowledging
Australia was not immune to the unfolding turmoil in US financial
markets, Swan said it would be in a safer position like other
nations if international cooperation improved global regulation.
“Well-functioning, well-capitalised financial markets and sound corporate governance are critical,” Swan said.
International
financial institutions also were important, he said, citing Prime
Minister Kevin Rudd’s speech to the UN General Assembly in September
which articulated a reform agenda for international institutions to “do
their job.”
“Relevant institutions must be able to effectively
fulfil the mandates we have given them – to identify and respond to
threats to global financial stability, in particular through improved
early warning capability.
“As part of this, key emerging market
economies – some of which are major lenders – must have a voice in
renewing the architecture and in devising crisis prevention measures.
“The
globalisation of financial markets means that all systemically
important countries are potentially part of the problem, and they must
be part of the solution.”
Rather than creating new institutions
to manage the crisis, he advocated using the existing forums of the
International Monetary Fund (IMF), the Financial Stability Forum (FSF)
and the G20.
“Under the Australian government’s proposed reform
agenda, the G20 would also strengthen its input into shaping the work
of the IMF and FSF and the implementation of agreed outcomes.
“The
IMF would have a stronger mandate for prudential analysis. And the IMF
and FSF would develop early warning systems of impending institutional
vulnerabilities and provide timely advice on remedial policies, which
has the necessary political authority.”
Mr Swan said the world
was looking to the US to show leadership on regulatory reform but
required all countries to examine the architecture of the global
financial system.
“These steps are at the heart of future crisis prevention,” he said.
“It is absolutely imperative that we learn the lessons of the present crisis and transform these into action.”
