Expand G7 to beat global turmoil: World Bank
World Bank President Robert Zoellick calls on the world's largest nations to band together to prevent the kind of massive economic downturn now striking the globe from ever happening again.world Updated: Oct 07, 2008 08:43 IST
World Bank President Robert Zoellick on Monday called on the world's largest nations to band together to prevent the kind of massive economic downturn now striking the globe from ever happening again.
Zoellick said the Group of Seven (G7) industrial nations should be expanded to include the top 14 global economies to tackle development issues as well as the financial turmoil plaguing richer nations.
"The G7 is not working," Zoellick said in Washington. "We need a better group for a different time."
Stocks were plunging on Monday across the globe as US and European leaders struggled to reassure investors that they have a handle on a financial crisis that has dried up credit availability and led to dozens of bank collapses and government takeovers.
But Zoellick warned that many developing countries had also reached a "tipping point" as the financial turmoil was restricting investment in the world's poorest countries. Most were already suffering from a surge in food and energy prices that has sparked riots and serious malnutrition.
G7 finance ministers will hold an annual meeting in Washington Friday. Zoellick said an expanded, "core group" of leading economies would have to be in contact much more regularly to prevent future crises from ballooning out of control.
"We need this mechanism so that countries are not left to fail ...so that global problems are not just mopped up after the fact, but anticipated," Zoellick said in a speech in Washington.
The global downturn showed that building up the developing world must be placed "on a par with international finance," he said.
"Until we build a more inclusive globalisation, the world will remain unstable, no matter how big the financial rescue packages," he told the Peterson Institute for International Economics.
As the finance crisis grew over the past three weeks, similar calls for a broadened international coalition in shoring up the global finance system came from an influential international banking lobby group, the Institute of International Finance, and from French President Nicholas Sarkozy.
Members of the International Monetary Fund and World Bank hold their annual meetings this weekend.
Resolving the financial crisis will no doubt be at the heart of the meetings, but the World Bank has been working to broaden the focus onto the plight of developing nations.