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January 29, 2010
What's going on in Davos this week?
By Cindy Ivanac-Lillig
If you live in the US and are interested in banking issues, this week was jam-packed. We had a highly anticipated State of the Union speech and a new Federal Open Market Committee statement. It was pretty exciting. However, there was one other large event that perhaps wasn't on many folks' radar screens -- the World Economic Forum (WEF) meeting in Davos, Switzerland. The WEF is an organization dedicated to global cooperation and collaboration aimed at solving some of the world's largest economic and social challenges. It is best known for its annual meeting of world leaders in Davos. The articles and speeches that have come out of this year's meeting on the issue of banking regulation were for the most part insightful and framed arguments slightly differently than we may be used to reading.
The head of the IMF, Mr. Strauss-Kahn, affirmed some policy ideas that have come out of the US and UK governments, but warned that if rules are not developed internationally, banking and financial organizations could simply move to places with the least regulation. France's President, Nicolas Sarkozy, called for a financial market transaction tax on banks and went on to point out that diverse accounting rules have helped to protect the status quo. He stated, "If competition is distorted by accounting rules that remain different from one country to another, from one continent to another, market actors will find it hard not to return to precrisis habits."
Although some of the conversation such as the different types of taxes that can be levied on banks is similar to discussions that are going on in our papers, the conference speakers seem to have a broader perspective regarding proposed accounting and regulation reform. It left me wondering what would be most effective -- developing reguation domestically first and then working with the international community to harmonize or just focusing on working with the international community from the beginning to ensure standardization. The latter of which may take some additional time.
Let me know what you and/or your class think about the Davos material....
Here are some links to some of the material that I mentioned here as well a link to the Davos Diary from the International Herald Tribune:
Davos Diary
IMf Chief Urges Coordinated Finance Rules
At Davos, Sarkozy calls for Global Finance Rules
Posted by Cindy at January 29, 2010 8:54 PM
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