New world bank

New world central bank proposed
The Vatican yesterday called for the creation of a central world bank and condemned the greed that it said had contributed to the global financial crisis, in a message that should strike a chord with the occupiers of the steps of St Paul’s.
A new supernational authority is needed to provide impartial oversight for the process of globalisation, the Vatican said, as it threw its weight behind proposals for a new tax on financial transactions.
The Pontifical Council for Justice and Peace declared that Bretton Woods financial institutions and the IMF in particular had lost the ability to stabilise global financial markets.
“Stabilising the world monetary system is no longer a ‘universal public good’ within its reach,” it said of the IMF. A shared body of rules and a new international institution were now needed to manage the global financial market, which had grown much more rapidly than the real economy, it said.
A document outlining the views, entitled Towards Reforming the International Financial and Monetary Systems in the Context of Global Public Authority, was presented by Cardinal Peter Turkson, the Ghanaian head of Justice and Peace. Financial deregulation, the abrogation of controls on capital movements and advances in technology had led to uneven growth and the current global crisis, the document said.
“The crisis has revealed behaviours like selfishness, collective greed and the hoarding of goods on a great scale,” it added. “No one can be content with seeing man live like ‘a wolf to his fellow man’, according to the concept expounded by Hobbes.”
If solutions were not found to the various forms of injustice, the negative effects could create a climate of growing hostility and violence, “and ultimately undermine the foundations of democratic institutions, even the ones considered most solid,” the Cardinal said.
For an institution inclined to think in millennia rather than weeks, the Vatican document was unusually topical. “The people on Wall Street need to sit down and go through a process of discernment and see whether their role managing the finances of the world is actually serving the interests of humanity and the common good,” Cardinal Turkson said. “We are calling for all these [international] bodies and organisations to sit down and do a little bit of rethinking.”
The new system of global financial regulation should emerge gradually and by consensus and provide a greater voice to developing countries.
“One can see an emerging requirement for a body that will carry out the functions of a kind of central world bank that regulates the flow and system of monetary exchanges similar to the national central banks,” the document said. “The underlying logic of peace, coordination and common vision which led to the Bretton Woods Agreements needs to be dusted off in order to provide adequate answers to the current questions,”the Vatican said.
It also recommended an ethical approach to taxation on financial transactions, the recapitalisation of banks with public funds and a clearer distinction between the domains of ordinary credit and investment banking.