Running The Bank Of Central Banks - interview with Andrew Crockett, Bank for International Settlements - Interview

International Economy, The, May, 2001 by Klaus C. Engelen

And as the recent "Commentary on the Financial Stability Forum's Report on the Working Group on Capital Flows" from the United Nations Conference on Trade and Development shows, there are strong objections from the developing and emerging countries against some of the Forum's recommendations. In the discussion paper series of the "Group of 24"--the IMF-World Bank grouping speaking for the development member countries--Andrew Cornford put big question marks behind the report. He says the report's "main weakness is its inadequate treatment of features of the behavior of international investors and lenders, as opposed to that of borrowers and other recipients of capital flows, as well as of rules in the countries where the former operate." This could be explained to a significant extent by the mandate of the Financial Stability Forum's Working Group on Capital Flows, "which had the effect of diverting its attention from global macroeconomic factors driving capital flows." This weakness may also reflect "a widespread assumption in lending and investing countries that the main flaws of the otherwise largely beneficial system of international capital movements which has come into existence since the 1960's are to be found in the weakness of recipient countries." In other words: Whatever happens to capital flows, if something goes wrong, the development and emerging countries are at fault.

Klaus C. Engelen is the international correspondent for Handelsblatt in Dusseldorf, Germany.