Resolution on the global economic and financial crisis
Date: 1998-09-17
Institutions: European Parliament
Subjects: Russia, economic recession, monetary crisis, world economy













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51998IP0835

Resolution on the global economic and financial crisis  


Official Journal C 313 , 12/10/1998 P. 0172 





B4-0835, 0863, 0865 and 0868/98Resolution on the global economic and financial crisisThe European Parliament,- having regard to its debate of 28 January 1998 on the financial crisis in south-east Asia,- having regard to its resolution of 12 March 1998 on the ASEM process (Europe-Asia relations) ((OJ C 104, 6.4.1998, p. 217.)),- having regard to the declaration of G7 finance ministers and central bankers of 14 September 1998,A. deeply concerned that, since the devaluation of the Thai baht in June 1997, a financial crisis has developed, spreading from south-east Asia to east Asia, Japan, Russia and Latin America,B. whereas this financial crisis is developing into a worldwide economic crisis with serious political and social consequences in many countries,1. Is concerned that the financial markets are now globalised and not subject to effective international regulation and supervision; therefore emphasizes the need for effective international regulatory and supervisory bodies; believes that this could be achieved through a review of the role of existing institutions, including the IMF, BIS and the WTO; calls on the international community to undertake such a review on an urgent basis;2. Recognizes that trade liberalisation and transnational investment remain the best way to address the crisis and reaffirms its commitment to the harmonious development of international trade relations in a free world economy;3. Reiterates its view - already expressed in its abovementioned resolution of 12 March 1998 - that the Council and the Commission should press ahead with proposals aimed at regulating the international economic and financial system so as to prevent a recurrence of a similar crisis; these proposals should include:- reform of the international financial institutions and an enhanced monitoring role to promote greater transparency in the actions of the markets, especially concerning data dissemination standards on financial information;- the publication of better and complete financial information so that capital markets work better and with greater transparency;- improved quality of supervision of the financial sector on both the lender¨s and the borrower¨s side through refining risk credit indicators and extending supervision to non-bank organisations;- improved regulation of the banking sector and controls over short-term lending and speculation;4. Believes that, in the context of globalised financial markets, capital controls do not offer a long-term solution but recognises that, given the current unstable political situation, controls may be necessary in the short term to protect the Russian economy and population;5. Recognises the risks of protectionist measures on capital movements or trade as a general rule to solve the economic and financial problems;6. Emphasizes that the EU has already made large-scale contributions to IMF loans to Asia and can continue to play an important role; believes that the preparations for the introduction of the euro have been a major factor in preventing currency instability in the euro-area and stresses that, with a single monetary policy, the euro countries will need to assume a major role in contributing to the solution of the financial crises affecting the world economy;7. In this respect, stresses that the utmost importance must be attached to the adequate international representation of the euro-area and EU interests, especially with regard to international institutions;8. Stresses that the fate of the global economy is now largely dependent on economic developments in the US and the EU and that recession in these economies would have disastrous consequences for total world output; emphasises therefore the importance of close monetary policy coordination between the ESCB and the US Federal Reserve System so as to avoid any monetary policy mistakes which could damage current growth prospects;9. Stresses the willingness of the EU to provide the countries concerned with technical or any other form of assistance which could be needed;10. Expresses the hope that serious consideration will be given to the reform proposals outlined in this resolution at the meeting of the group of 22 leading industrialised and emerging economies being planned for early October;11. Proposes effective dialogue between Parliament, the Council and the Commission in the coming months to define the EU¨s ongoing contribution to the cause of global economic and financial reform;12. Instructs its President to forward this resolution to the Commission, the Council, the governments of the group of 22 leading economies and the Presidents of the IMF and the World Bank.7