UN chief Ban Ki-moon on Tuesday said the current economic crisis has clearly exposed the flaws in the existing international economic system and asked institutions to become more "representative, credible, accountable and effective."
"The current global economic and financial crisis is exposing dangerous weaknesses and flaws in international economic system," Ban said in his address to a high-level meeting of the Economic and Social Council (ECOSOC), at the UN headquarters in New York.
"Recent events have proven that the current system of global economic governance is not adequate to today's challenges. Our institutions and governance structures must become more representative, credible, accountable and effective," he said.
Observing that faith in financial deregulation and market self-regulation has been diminished, to say the least, Ban said: "In its place, we are seeing a new commitment to effective regulation and supervision - not just nationally, but also internationally."
What began with financial turmoil in the third quarter of 2007 has escalated into a full-blown, global recession. The UN system, including the Bretton Woods institutions, foresees a shrinking global economy in 2009, he said.
All this, Ban said, will bring down people's average incomes in much of the world.
"Global trade is collapsing. Hundreds of millions of people are losing their jobs, their income and their ability to survive. In too many parts of the world, frustration has erupted into violent protests, threatening stability and peace," he said.
The UN chief said development efforts are sagging under the weight of the crisis. "We expect negative effects in nearly every area covered by the Monterrey Consensus and the Doha Declaration on Financing for Development," Ban said.
The Secretary General argued the current system emerged through the 1944 UN Conference at Bretton Woods, and the world body, with its universal membership, must be fully involved in the reform process.
"We need to ensure that a large enough share of the additional resources will flow to developing countries, to help them cope with the crisis and preserve hard-won gains towards the Millennium Development Goals.
"At the very least, existing commitments to increase aid for the poorest countries must be fully met," Ban said, welcoming the decision of the latest G20 summit in London to allocate more resources to developing countries.
The London Summit was an important beginning. "But we must act urgently to keep the financial crisis and economic recession from evolving into a major humanitarian crisis and a breakdown in peace and security," Ban said.
The United Nations, on its part, is in the process of establishing a system-wide mechanism for monitoring vulnerability, and sounding the alert when necessary, he said.