Kang Calls for G-20 to
Lead Financial Collaboration

Finance minister also stresses a quota reform at the World Bank

Minister of Strategy and Finance Kang Man-soo called for the Group of 20 countries, including emerging countries, to take a leading role in fighting off the current global financial crisis.
Minister Kang said in his keynote speech at the 63rd IMF/WB Annual Meetings held in Washington D.C. on Oct. 13, "We should not forget, however, that emerging and developing economies are suffering the most from the turbulence in the financial markets." "To ease their burden, I would suggest global market-stabilizing measures such as a liquidity provision and engage emerging and developing economies through close coordination. To facilitate policy coordination, I look forward to the G-20 taking a stronger role. Given its comprehensive membership, consisting of both developed and developing economies, the G-20 can be an effective platform for global collaboration."
Drawing upon Korea's experience with the Asian financial crisis, Minister Kang suggested that policy-makers should first take swift actions sufficient to stabilize the market when necessary. "In this context, I fully support the decisive and timely market-stabilizing measures including liquidity provisions and interest rate cuts."Regarding the role of the International Monetary Fund amid today's uncertainty, Kang said that first of all, the Fund has a bigger role to play in this unstable financial market, and it should help the global economy address the current turmoil by strengthening its surveillance. "Specifically, the Fund needs to help member countries enhance the financial supervisory system in response to the evolving situation in financial markets. Objective and transparent evaluation and disclosure of the risks inherent in new financial products will enable us to minimize systemic risks and regain investor confidence."Minister Kang said that secondly, the Fund should focus its analysis on the macro-financial linkage by fostering the capability to identify and analyze the spillover effect and its risk. Going further, he said, it needs to make recommendations on macro-economic policies, including the counter-cyclical role of fiscal policy to revitalize investment and consumption in the context of slowing growth.
The minister said that thirdly, the development of regional surveillance and a crisis management system and its coordination with the IMF are critical to effectively address the current financial crisis.
"In Asia, for example, the CMI Multilateralization, which is designed to establish a regional liquidity-providing system, can be a desirable complement to the IMF,"he said.
"As for the real economy, it is important that all member countries cooperate to stabilize oil and other commodity prices and, thereby, mitigate worldwide inflationary pressure. To this end, commodity-exporting countries should stay away from 'export protectionism'and maintain an adequate level of supply. On the other hand, developed countries need to take appropriate actions to stop speculative demand from driving up prices,"he said.
Regarding the World Bank's reform, Kang said, the body's share structure should reflect each member's relative weight in the global economy, saying that it has been a decade since the bank realigned its quota. "The current quota does not fairly reflect the status of emerging and dynamic countries whose economies have experienced significant changes,"he said.
Kang also appealed for more international cooperation and support for North Korea to help it open and reform its economy. nw

Minister of Strategy and Finance Kang Man-soo delivers his key-note speech during the 63rd IMF/WB Annual Meetings held in Washington D.C. on Oct. 13.