IIF Says Domestic Bailouts Hurt Capital Markets |
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June 11,2009
An international financial industry group warned that concerted international action to fight the global financial crisis, rather than separate rescue plans undertaken by different governments, is urgently needed to protect the global financial system and ensure it can run smoothly.
An international financial industry group warned that concerted international action to fight the global financial crisis, rather than separate rescue plans undertaken by different governments, is urgently needed to protect the global financial system and ensure it can run smoothly.
The Institute of International Finance, an association representing some 370 financial institutions, said in a report published Thursday that the global financial sector has become increasingly fragmented following policies by various governments to safeguard their own domestic banking sectors. Such "ring-fencing" hurts the development of a unified capital market, and eventually, also potential economic growth for governments, it said.
The IIF proposed letting existing international bodies, such as the newly formed Financial Stability Board and the International Monetary Fund, help governments coordinate their separate financial policies as well as monitor their impact on the global markets. It isn't evident that's being done now, it said.
"The trends that have come to the foreground, if continued, could create a protectionist environment that will be damaging for all. We believe it is essential that actions be taken to not only roll back the inward-looking measures that are being seen, but to also promote international support to enhance the ability of banks to provide low cost services to their customers around the world," said Josef Ackermann, IIF's chairman, at a press briefing in Beijing Thursday. Mr. Ackermann is also the management board chairman at Deutsche Bank AG. IIF members are in Beijing for their spring membership meeting.
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