INDIA is well equipped to play a critical role in preparing the blueprint for a new global financial architecture, or GFA as it has come to be known, considering that the country’s pragmatic policies helped it to stave off a crisis during the global meltdown. India had adopted pragmatic policies successfully; the country can be objective and impartial in the deliberation of GFA. Though several initiatives have been undertaken by IMF, an inter-governmental organization, for internal reform as evident in its research documents. It is not very clear whether the open mind and objective approach, as found in the research documents, is being reflected in IMF’s operations.
In particular, safety nets should be considered at national, regional and global levels, taking into account the circumstances of different countries and regions, the former governor added.
Currently, two approaches are being debated. One is on the need to create new institutions to replace or supplement the existing global institutions. These include an institutional framework for a new global reserve system, including establishment of a global central bank, a global economic co-ordination council, an international debt restructuring court, and above all, a new Bretton Woods conference to consider a new GFA.
Those in favour of new institutions argue that designing a new GFA should not be difficult since the world is far more conducive to global co-operation now than before. The current crisis is of such magnitude that a fundamental change in institutional structures is called for, and hence, a new GFA is required. However, since creating new institutions would in itself be a complex process, consensus appears to be in favour of reforming the existing institutions
Source: ET
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