Blair calls for social code in times of crisis
Saturday 10 October 1998
The code would cover "social support systems and public health and education services" and "show that globalisation has more to offer the poor than insecurity".
Mr Blair also said there was a need for a "new financial architecture for the world economy" to tackle the global crisis.
The Prime Minister was speaking in Hong Kong on the last leg of his five- day visit to China, where he has stressed the need to keep markets open and not retreat into "protectionism and isolation".
Yesterday's speech shifted away from the advocacy of free markets and focused on fears that the world's poor have had to pay a high price for the internationalisation of markets.
Until now Mr Blair and the Chancellor, Gordon, Brown have emphasised the virtues of fiscal prudence, but Mr Blair is aware that excessive reliance on tight monetary policies, without social measures, will hit the poor hardest. He said yesterday that recent interest-rate cuts demonstrated "the shift of balance of risk away from inflation".
The Prime Minister will press this issue at the next meeting of G7 leaders, and has discussed it with President Clinton. Mr Blair stressed, however, that he wanted to include "representatives of the wider financial community" in these discussions.
Also high on Mr Blair's agenda is what he described as a fresh look at the international financial system "to devise new rules and codes of practice to go with it, which not only measure up to the volume of capital moving about global financial markets, but also to its speed".
Again echoing the Chancellor, Mr Blair said that the Bretton Woods agreements on open markets which "have served us extremely well for 50 years" need to be re-examined in the light of the emerging markets' battering by sudden inflows and outflows of capital.
He said that new ways had to be found to deal with "secretive and highly leveraged funds [which] can operate on an unprecedented scale, almost invisible to our national supervisory systems and to the international financial institutions".
He said that the Government would be supporting proposals to increase contributions to the IMF and called for endorsement of proposals to raise the fund's borrowing arrangements with the world's 11 largest central banks.
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