Working Papers | G-24

Overriding Jurisdictions in Global Financial Governance, And Long Term Financing for the Poorest Countries

29th September 2000 Abstract

Governance-Related Conditionalities of the International Financial Institutions

10th August 2000 Abstract

This paper examines the new found enthusiasm for governance-related conditionalities in the International Monetary Fund (IMF) and World Bank lending. This new agenda has focused in particular on legislative and institution-building efforts by borrowers to increase accountability, transparency, the rule of law, and participation. The paper attempts to document this trend by analysing a sample of 25 upper-tranche arrangements in 1999.

Exchange-Rate Policies for Developing Countries: What Have We Learned?

10th June 2000 Abstract

The 1997–1998 Asian crisis, with its offshoots in Eastern Europe and Latin America, has reignited the debate about appropriate exchange-rate policies for developing countries. One widely shared conclusion from this episode is that adjustable or crawling pegs are extremely fragile in a world of volatile capital movements. The pressure resulting from massive capital flow reversals and weakened domestic financial systems was too strong even for countries that followed sound macroeconomic policies and had large stocks of reserves. As a consequence, the polar regimes of a “hard pegs” (such as a currency board), or a clean float, are enjoying new popularity.

The Standardization of Law and Its Effect on Developing Economies

10th June 2000 Abstract

A widely used tool in law and development programmes is the supply of well-designed laws from the outside. This method of law development has now been embraced by international organizations as a way to improve the legal framework for global markets. The International Monetary Fund (IMF) has endorsed attempts by various organizations to develop legal standards with special emphasis on corporate and financial institution laws. The common idea behind these attempts is that the supplied laws once incorporated into domestic legal systems will improve the existing legal framework, and thus further economic development. This paper takes issue with this concept of law development. It argues that for developing effective legal systems, the contents of the supplied laws is of only secondary importance to the process of law development and the compatibility of the new laws with pre-existing conditions, including existing legislation and legal institutions. Three factors account for this: (i) only a few rules are freestanding, i.e. can be fully understood and enforced without reference to other legal terms and concepts; (ii) law is a cognitive institution, and the application and enforcement of rules is determined by the perception of new rules by users and enforcers in the receiving country; and (iii) effective law enforcement is a function of the extent of voluntary compliance and available resources in a given country. A closer analysis of the rules whose standardization is currently proposed for building an international financial architecture shows that the implementation of these standards and their effectuation will require more efforts by the law receiving countries than underwriting them, if the goals of standardizing the law are to be achieved. The paper discusses the implications for countries wishing to attract foreign investments by adopting the new standards, and makes some proposals for creating more effective legal systems in the area of financial law.

The Governance of the International Monetary Fund

13th May 2000 Abstract

The Basle Committee’s Proposals for Revised Capital Standards

10th May 2000 Abstract

The Basle Capital Accord of 1988 was the outcome of an initiative to develop more internationally uniform prudential standards for the capital required for banks’ credit risks. The objectives of the Accord were not only to strengthen the international banking system but also to promote convergence of national capital standards, thus removing competitive inequalities among banks resulting from differences on this front. The key features of this Accord were a common measure of qualifying capital, a common framework for the valuation of bank assets in accordance with their associated credit risks (including those classified as off-balancesheet), and a minimum level of capital determined by a ratio of 8 per cent of qualifying capital to aggregate risk-weighted assets.

Interests and Options of Developing and Least-Developed Countries

10th May 2000 Abstract

Negotiating interests and options have to be identified against the background of the possible
agenda of a new round. Several important elements of this agenda are codified in what is referred
to as the “built-in agenda”, including: (i) an assessment of the implementation of Uruguay
Round Agreements (URAs); (ii) specific reviews of particular agreements that were mandated
by the Uruguay Round; and, as the core of a new round, (iii) new negotiations on agriculture,
GATS, and TRIPs. Possible further components of the agenda could be negotiations on trade
and investment, competition policy, trade facilitation, transparency in government procurement,
environmental and labour standards, and further liberalization of industrial tariffs, and textiles
and clothing.

The Millennium Round and Developing Countries: Negotiating Strategies and Area of Benefits

10th March 2000 Abstract

Written prior to the WTO conference in Seattle, this paper identifies negotiating strategies and areas of benefits from a new multilateral round of trade negotiations for developing countries. Although the attempts to launch a round at Seattle failed, the strategy outlined in the paper remains relevant, should fresh efforts be made to launch a round.

From the viewpoint of overall strategy, developing countries should limit the agenda for a new round to the built-in Uruguay Round (UR), agenda plus trade liberalization in industrial goods. From the long-run perspective, they need to commit substantial human and financial resources to the creation of native research and negotiating capacity on WTO-related issues.