Central bank of central banks warns against ‘scapegoating’ globalisation
The international body that represents the world’s central banks claims globalisation has been made a scapegoat for rising inequality.
Against a backdrop of protectionist rhetoric in many countries, including the US, the Bank for International Settlements used its annual report to argue that globalisation has cut global poverty.
Reversing globalisation would be “greatly detrimental to living standards,” it warned yesterday, launching a defence of closer cross-border ties. The BIS concedes gains from trade have not been evenly distributed at national level but says that other factors, most notably technology, have played a bigger role in widening the gap between rich and poor.
“There is ample evidence that globalisation has not been responsible for the majority of the concurrent increase in within-country income inequality,” said the report. “Attempts to roll back globalisation would be the wrong response to these challenges. Globalisation, like technological innovation, has been an integral part of economic development.”
The backing for globalisation echoes pleas from the International Monetary Fund and the Organisation for Economic Co-operation and Development not to move towards more inward-looking policies. The BIS report urges governments to make labour markets flexible enough to help displaced workers retrain and benefit from regional employment drives.
It also calls for international cooperation to shore up the stability of the global financial system. “Instead of retreating from the ties of global trade and finance, we should reinforce them. Instead of loosening them, we should make them more resilient,” wrote BIS general manager Jaime Caruana.