Emily Vogl, Frank Vogl
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AMM 2006 Opening Statement: Josef Ackermann
Singapore, September 15, 2006 — Dr. Josef Ackermann
Chairman of the IIF Board of Directors
Chairman of the Group Executive Committee, Deutsche Bank AG.
Singapore, September 15, 2006
Press Conference Opening Statement
Good afternoon. The IIF is delighted to be meeting in Singapore. The impressive economic development of Asia is reflected here around us in Singapore where we can see the results of remarkable investment and sound economic policy. We are appreciative of the hospitality to the IIF by the government here in Singapore and I would also like to thank the IMF and the World Bank for once again hosting this press conference.
Asia's rising role and influence on global economic developments is a priority issue for our members from across the world. And, no wonder, for example, when we note in today's new IIF report that 2006 net private capital flows into Asia this year may exceed $180 billion, so equaling more than 40 percent of all flows to all emerging markets. Asia's economic dynamism is yielding enormous benefits for the global economy, but it is also posing important challenges. This will be a key theme for our discussions at the IIF's Annual Membership Meeting, which starts tomorrow with an unprecedented IIF-ASEAN Forum that brings together ministers and finance leaders from throughout the ASEAN countries.
Sustaining Asia's momentum will depend on the continued economic policy management skills of its national authorities. It will also depend on the ability of the governments and central banks of the world's leading economies to pursue mutually reinforcing policies designed to secure non-inflationary growth and an orderly unwinding of prevailing current account imbalances. This is the major agenda item for tomorrow's meeting of the G7 and Sunday's meeting of the IMFC and a critical topic, of course, of our IIF conference.
Policy actions are needed to try and ensure an orderly unwinding of the imbalances. Delays in taking bold policy measures run the risk of market corrections that, as experiences in the past have shown, can be disruptive. Arrangements are needed where each key national authority demonstrates a willingness to take domestic policy initiatives that together can create a viable multilateral package of actions.
In particular, the finance ministers who are meeting this weekend should agree upon fiscal policy and structural reform actions that can create confidence and overtime foster the reduction of the global imbalances. We welcome the strategic approach that was outlined by the IMFC in the spring and the subsequent IMF consultations. Now, these initial steps need to be followed by bold, coordinated measures.
There needs to be evidence of resolute political will by the governments of the leading economies to steer the global economy into safer waters. This is especially needed given the paralysis that has gripped the Doha trade negotiations, and the concern about global oil prices, although of course we welcome the recent moderation.
We have recently seen some signs of a slowing of the U.S. economy and earlier this year we saw indications of risk aversion among investors. Both of these factors could portend more challenging times for emerging markets and my colleagues Bill Rhodes and Robert Setúbal will talk more about this. It is important to underscore that against this background it is timely that we are seeing rising support for the "Principles for Stable Capital Flows and Fair Debt Restructuring in Emerging Markets" as a framework for pragmatic action based upon voluntary market practices.
On Monday, the Group of Trustees that has been formed to monitor progress on the implementation of the Principles and advise on their development will hold its inaugural meeting. This is an extraordinary financial system innovation.
The Trustees bring together outstanding public office holders, top executives of private financial institutions, and a number of eminent global financial leaders. Their public-private dialogue and cooperation is not only innovative, but essential given the dominant position that the private sector has assumed as the source of external capital for emerging market economies.
The Group of Trustees is co-chaired by ECB President Jean-Claude Trichet, Brazil's central bank Governor Henrique de Campos Meirelles, and by Toyoo Gyohten, a former top Japanese official and leading banker. The Trustees will consider a report that will be made public after its meeting and that has been prepared by the new Principles Consultative Group. The PCG, comprising senior public and private sector officials and executives, has been addressing key issues and encouraging sound policies in emerging markets.
Since the Principles were developed and endorsed by the G20 in November 2004, we have seen an increasing number of national authorities, investors and creditors recognize that adoption of the Principles and application of the spirit that underpins them is important. Attention is being given to the issues of investor relations and data transparency within the framework of the Principles. Discussions of country economic issues are gathering momentum.
Today, the IIF is publishing a further assessment of progress in this area, following an initial report last December. These reports show that substantial progress has been made in some countries, although there remains much that sovereign borrowers can do to strengthen the flow of valuable information to the markets.
Substantial momentum is now being achieved with regard to the implementation of the Principles. We are also pleased by the informal cooperation that is evolving with the IMF and we hope the IMFC will encourage all parties to deepen their commitment to this important project going forward.
Now, let me to turn to another issue that relates to the health of the international financial system: the regulation of financial firms. The IIF is highly active on an expanding agenda of regulatory issues and my colleague Cees Maas will comment on some of these. Our key goal is to work with the regulatory authorities to achieve more effective and efficient global regulation.
In this context we have launched a major initiative to develop a strategic dialogue on effective regulation. This aims to forge common goals that the industry and its regulators can move toward to achieve a regulatory regime that supports a healthy international economy, financial stability and the best interests of customers. Recent times have seen a rising volume of regulation from both national and international authorities that are sometimes duplicative and inconsistent. Among the critical areas of concern that we are focusing on are regulations related to cross-border issues, global enforcement, and anti-money laundering.
This initiative, under the direction of a special committee headed by Bill Harrison of J.P. Morgan Chase and Peter Wuffli of UBS, is of great interest to our members and is receiving a positive response from the regulators. Following a number of informal discussions a very productive meeting was held 9 days ago in Paris between our private sector leaders and the Financial Stability Forum (FSF), which is a group of G7 regulatory and finance officials. We are most encouraged by the FSF's strong support. We shall report more about this progress in coming months.
As you know we have long supported Basel II as an important step toward aligning economic and regulatory capital and moving regulatory capital requirements into a more market-based world. In order for the Accord to be effective globally, however, it is important that it be applied consistently across jurisdictions. Recent developments in some countries, particularly in the United States, raise serious questions on this subject with current proposals for implementation deviating substantially from the global framework and from best internal risk management practices. We would strongly encourage all authorities to align their approaches with the Accord to deliver a global risk-sensitive framework for international banks.
Now, let me turn to my colleagues for some additional comments and first to Bill Rhodes.
Emily Vogl, Frank Vogl