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G-15 for effective monitoring of global financial centres

business Updated: May 18, 2010 16:27 IST

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The Group of Fifteen (G-15) developing countries, including India, have called for effective supervision of major financial centres and institutions to prevent repeat of recent global economic crisis which they said had adversely impacted the developing nations.

The Grouping, at the conclusion of 14th summit discussion here, noted with deep concern that the crisis, which had its origins in major financial centres in the developed world, led to food insecurity, volatile commodity prices, drying up of private capital flows and unemployment besides loss of confidence in the international financial system.

The call for monitoring is reminiscent to the resolve of G-20 grouping last year to keep a watch and reform multilateral funding agencies.

The global financial crisis, triggered by fall of America's investment banker Lehman Brothers in September 2008, impacted economies of the world. The crisis saw India's economic growth rate slipping to 6.7 per cent in 2008-09 from over nine per cent in the preceding three years.

The financial crisis, the Joint Communique of the G-15, said: "Highlighted long-standing systemic fragilities and imbalances (of the existing global financial system)."

The grouping, which comprises nations from Asia, Africa and Latin America, called for expanding "the scope of financial regulation and supervision, making it more effective and transparent, with respect to all major financial centres, institutions and actors, including an unbiased and effective IMF surveillance of financial centres, international capital flows and financial markets."

Seeking greater voice and participation for developing nations in multilateral organisations, the Communique called for completion of IMF quota review by November 2010.

"The Bretton Woods Institutions (like World Bank and IMF set up to fund reconstruction of world after World War-II) should not be seen as the unique source of financing for the developing world," it said calling for alternative financial institutions.

Only last month, the World Bank member nations approved greater voting rights for developing countries including India and China. This change would also enable India to seek additional assistance from this multilateral funding body.