Global fi­nan­cial safety net needs strength­en­ing

China Daily (USA) - - ECONOMY - By WANG YANFEI in Hangzhou

The global fi­nan­cial safety net can hardly meet ex­pec­ta­tions, as “asym­met­ric and frag­mented prob­lems” loom large, In­ter­na­tional Mon­e­tary Fund Manag­ing Di­rec­tor Chris­tine La­garde has said.

The global fi­nan­cial safety net, which was put in place af­ter the fi­nan­cial cri­sis in 2008, is de­signed to help re­duce risks while pro­vid­ing sup­port to help coun­tries to re­solve any fi­nan­cial chal­lenges or crises, us­ing spe­cial funds as in­surance.

Cao Yuanzheng, chief econ­o­mist with Bank of China, said that the un­even coverage and pol­icy im­ple­men­ta­tion across coun­tries point to the need for so­lu­tions to fix the net, es­pe­cially its abil­ity to tackle neart­erm eco­nomic chal­lenges.

“Ad­vanced economies are more pro­tected by the safety net, while some emerg­ing economies have no ac­cess to it or face higher costs in or­der to re­ceive proper pro­tec­tion from the fund,” he said.

Quota re­views and giv­ing ad­di­tional seats on the IMF Ex­ec­u­tive Board for the emerg­ing mar­kets and de­vel­op­ing economies would help re­solve the un­even prob­lems.

This year’ s G 20 Sum­mit pro­vides a plat­form for pro­mot­ing di­a­logue across na­tions to seek ways to im­prove the fi­nan­cial safety net.

In the mean­time, Asian coun­tries are mov­ing to es­tab­lish a net at the re­gional level that will help re­solve some prob­lems, said Chen Fengy­ing, a re­searcher with the China In­sti­tutes of Con­tem­po­rary In­ter­na­tional Re­la­tions. “Is­sues such as how to pro­vide bet­ter aid to the ex­ist­ing fi­nan­cial fa­cil­i­ties will need time to see fur­ther im­prove­ment amid po­lit­i­cal re­sis­tance.”

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