Cen­tral bank of cen­tral banks warns against ‘scape­goat­ing’ glob­al­i­sa­tion

The Guardian - - FINANCIAL - Katie Allen

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.

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