OVERCOMING THE CRISIS

Summer 2009

by Nicolas Véron

No perfect global institutional architecture can exist in our imperfect and largely undemocratic world. “All politics is local” while “all economics is global”. There is a fundamental trade-off between legitimacy, conferred by long-established national political systems, and efficiency, which transcends borders. “Creating new institutions that will better balance the requirements of legitimacy and effectiveness will be the prime task for the coming generation", as Francis Fukuyama put it back in 2006.

The idea of having the IMF or FSB or any other three-letter-acronym as the coordinator of all global action is a pipedream. The G20, or a similar group of heads of government, is way too large and diverse to run everything itself. All it can and should do is endorse specialised institutions, fill the gaps between them, arbitrate turf conflicts, and when necessary push for reforms of their governance. Let’s hope the next decade is remembered as a time of exceptional institutional innovation, like the late 1940s. Streamlining is not today’s priority.

Further articles in this  OVERCOMING THE CRISIS section
Edmond Alphandéry	"It's up to Europe to set a global example of concertation"
Jerzy Buzek	"Let's return to the grassroots and base growth on savings and productivity"
Mark Eyskens	“My 10 point rulebook for the globalised economy”
Franz Fischler	“What we need first and foremost is a change in public consciousness”
Nicole Gnesotto	"We need a new global political deal now the West is no longer master of the world"
Béla Kádár	“To save the market economy and democracy, governance has to step in where corporations ruled and markets failed”
Noëlle Lenoir	"My five courses of action"
John Monks	“The financial markets are where the re-building must start”
Poul Nyrup Rasmussen	"The EU must pull its weight and demonstrate real leadership"
Klaus Regling	“Better regulation and supervision, and the greater legitimacy of international financial institutions”
Onno Ruding	“Implement de Larosière and then consider further reform”
André Sapir	"Restoring the health of banking is no longer a financial problem but a political one"
Tøger Seidenfaden	“We urgently need much stronger international institutions"
Constantine Simitis	“Fiscal stimuli, yes. But social goals are also crucial”
Loukas Tsoukalis	"To be a major player on the new global architecture, Europe must end its IMF over-representation"
Alvaro de Vasconcelos	"Now it's the West that needs the Rest"
George Vassiliou	"How to beat this crisis and head-off another"
Nicolas Véron	“Institutional innovation, not streamlining, is today’s priority”
Stephen Wall	“We need a eurozone regulatory structure, and if Britain wants a role it must manage its eurozone entry”
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