'New world order' needs better economic grounding: Carney



Bank of Canada Governor Mark Carney said Thursday that renewed globalization is going to require more transparency.
Despite the meltdown, globalization has been good, he said. "Globalization lifted hundreds of millions of people out of poverty and created the potential for hundreds of millions more to share their destiny."
But it's not clear how international commerce and finance will be reorganized coming out of the recession, Carney told the International Economic Forum of the Americas in Montreal.
Carney proposed an agenda for fixing the failures that caused the recession, saying "the next wave of globalization needs to be more firmly grounded and its participants more responsible," in part because a belief in markets has been weakened by policy-makers and private players who didn't always live up to their responsibilities.
Carney suggested the "new world order" needs:

  • More transparency to avoid problems such as inadequate disclosure on securitized products.
  • More efficient markets that are less susceptible to extreme price movements, which contributed to companies failing and the global economy crashing.
  • More prudent regulations, such as new capital requirements for banks, to help smooth the credit cycle.
  • Ensuring all countries accept responsibility for promoting a better international monetary system, which could include allowing their exchange rates to adjust.

The decisions made in the recovery could influence how open, equitable, and prosperous the new world order will be, he said.
'More to come'

Carney said there are still major adjustments being made to inventories, investment growth will be negative into 2010, G7 unemployment will rise and excessive levels of private debt must still be cut.
"Although global demand and trade levels appear to be approaching bottom, and inventory and labour adjustments have already been substantial, there is still more to come," he said.
Governments have fought the economic shortfall with more spending, but they need to develop realistic exit strategies to avoid stifling the recovery, Carney said.



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'New world order' needs better economic grounding: Carney