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BigLogo.gif UN Member States on the Record
UNCTAD report on the global economic crisis
24 March 2009 / 03:42

[Dateline: Geneva | Author: UNCTAD]

UNCTAD report on the global economic crisis Self-feeding speculation in housing, currencies and commodities through complex financial instruments where appropriate prices could not be determined led to a divorce from the "real" economy, a new United Nations Conference on Trade and Development (UNCTAD) report contends -- and by the time these speculative bubbles burst, the global financial crisis was a foregone conclusion.

The herd behavior that characterized these speculative positions went unregulated.

Reforms should be made to the international financial and monetary systems allowing appropriate government intervention and international oversight so that these systems to do not get so far out of balance in the future.

The report, titled The Global Economic Crisis: Systemic Failures and Multilateral Remedies, was released on Thursday 19 March in Geneva.

It was written by economists serving on UNCTAD's Secretariat Task Force on Systemic Issues and Economic Cooperation established by the Secretary-General of UNCTAD, Mr. Supachai Panitchpakdi in advance of several upcoming international conferences on the global economic crisis.

"The United Nations must play a central role in the reform process," Mr. Panitchpakdi says in his forward to the Report, "not only because it is the only institution which has the universality of membership and credibility to ensure the legitimacy and viability of a reformed governance system, but also because it has proven capacity to provide impartial analysis and pragmatic policy recommendations."

The report highlights specific areas in which the global economy experienced systemic failures. While there are many more facets to the crisis, UNCTAD examines some of those that it considers to be the core areas to be tackled immediately by international economic policy-makers because they can only be addressed through recognition of their multilateral dimensions. 

The report investigates in particular three interrelated issues of importance to developed and developing countries alike, and proposes measures to address the systemic failures they have entailed:

- how the ideology of financial deregulation within and across nations allowed the build-up of pressures whose unwinding has damaged the credibility and functioning of the market-based models that have underpinned financial development throughout the world; 

- how the growing role of large-scale financial investors on commodities futures markets has affected commodity price volatility and fed speculative bubbles; and

- the role of widespread currency speculation in exacerbating global imbalances and fuelling the current crisis in the absence of a cooperative international system to manage exchange rate fluctuations to the benefit of all nations.