THE WHITE HOUSE AT WORK
Tuesday, October 6, 1998
MEETING THE CHALLENGES OF THE GLOBAL ECONOMY
The global economy simply cannot live with the kinds of vast and systemic disruptions that have occurred over the last year. We must modernize and reform the international financial system so that it is ready for the 21st Century.
President Bill Clinton
October 6, 1998
Today, President Clinton addresses the annual meeting of the World Bank/International Monetary Fund (IMF). The President will outline the short term challenge of strengthening responsiveness to the current global economic crisis and the long-term challenge of building a stronger global financial architecture to better prevent financial instability.
Addressing The Short-Term Challenge. Over the past year, economic disruptions around the globe have caused real and dramatic hardship to the citizens of the world. The President is calling for decisive action by the leading nations of the world to end this crisis and modernize and reform the international financial system so we are all ready for the challenges of the 21st Century:
- Leading Nations Must Act To Spur Global Growth -- no nation can act alone. America must maintain the fiscal discipline that has lowered interest rates and fueled investment and job growth and meet its global responsibilities by paying its dues to the IMF; Europe must pursue policies to spur growth and keep their markets open, and Japan must be the catalyst for renewed economic growth in Asia by reviving its banking system, restoring domestic growth, deregulating its economy, and opening its markets;
- Helping Asian Corporations Restructure Their Debt. To help spur economic growth in Asia, firms that are being paralyzed by crushing debt are being provided short-term credit and investment insurance to keep capital flowing. President Clinton is pleased that Japan will contribute to the reconstruction effort and that the World Bank has agreed to double its investment in the social safety net in Asia, bringing needed help to those who have been harmed by the financial crisis;
- Developing Innovative Ways To Deal With Financial Turmoil. Last Friday, President Clinton proposed, and members of the G-7 supported, two initiatives to improve the effectiveness of the response by international institutions to the financial crisis: (1) Strengthening the IMF financing mechanism to increase our ability to respond to difficult global financial conditions; and (2) Proposing that the World Bank and other international financial institutions develop a new emergency capacity with a particular focus on support for the most vulnerable groups in society;
Building A Strong Framework For The 21st Century. As the current financial crisis subsides, we must begin reforming the global financial architecture to better prevent financial instability, and to allow the system to manage instability when it occurs with a minimum amount of damage. The President is calling for:
- Increased transparency and openness in the international financial systems. Governments must maintain sound economic policies and the international community must be ready to help those countries who commit themselves to such policies in times of need. Treasury Secretary Rubin and Federal Reserve Board Chairman Greenspan are working with their G-7 counterparts to find new ways to make "precautionary" lines of credit immediately available to nations committed to strong economic policies;
- Strengthening national financial systems, securing democratic processes. Countries must work to limit the swings of the business cycle through sound economic policy, an open and fair trade policy that brings down barriers to global commerce, and a strong social safety net to provide the security people need -- effective unemployment insurance and retirement systems, keeping schools open and strong during an economic downturn, and economic development that does not come at the expense of environmental degradation;
- Developing new ways to respond to crises, including greater participation by the private sector. As the global economy expands, the need for cooperative efforts between the public and private sectors in times of economic turmoil will increase.