Global Finance Reform
Documentation
Collected by Steve Waddell, Networking Action: Organizing for the 21st Century
URL = http://www.networkingaction.net ; blog: http://www.blog.networkingaction.net
Source: Concept Note based on,
- , S. et al. 2009. Creating a Global Finance System for the 21st Century: An Action Strategy. A Report of the Global Finance Initiative. iScale/GAN-Net.
Some statements of Purpose and Principles for Finance
Friedrich-Ebert-Stiftung
Key principles for regulatory reform:
• Regulation must be comprehensive, covering all financial activities, instruments, institutions and markets, including off-balance sheet activities and offshore centers. • Regulatory reforms should have a strong counter-cyclical focus to prevent the excessive buildup of leverage during booms. • The governance of such a system would likely be based on a well-functioning network of national and regional authorities supervised by a global financial regulator.
Trade Union Summit to the G20 Crisis Summit
The blueprint for reregulated financial markets that ensures stable and cost-effective financing of the real economy, must include:
• Prohibiting all forms of off balance transactions • Submitting foreign investments and capital flows to proper domestic regulation • Promoting community-based financial services • Improving consumer protections • Enhancing the social purpose of pension schemes to provide good retirement • Establishing an international regime for taxing financial transactions • Ensuring that central banks are publically accountable for their actions • Ensure active supervision for banks and large financial conglomerates • Regulating private investment firms • Regulating credit risk transfers • Adopting controls to limit speculative behaviors in trade exchanges • Curbing corporate short-termism
G20 Declaration: principles for reform
• Strengthening Transparency and Accountability • Enhancing Sound Regulation • Promoting Integrity in Financial Markets • Reinforcing International Cooperation • Reforming International Financial Institutions
Network for Sustainable Financial Markets
• The Economic and Social Purpose of Markets is to Create Long-Term, Sustainable Value, which Requires the Efficient Allocation of Capital towards that Goal • Sustainable Value Creation Requires that Hidden Risks and Rewards be Identified and Valued • Balance Between Short-Term and Long-Term Views is Needed • Market Participants Must Take Responsibility for Their Actions • Governance at All Financial Institutions Should be Improved • Better Alignment of Financial Interests is Needed to Reduce Agency Costs • A Coordinated Global Approach is Needed to Better Protect the Financial Markets
Principles for Investment
United Nations Principles for Responsible Investment
Goal: to help investors integrate consideration of environmental, social and governance (ESG) issues into investment decision-making and ownership practices, and thereby improve long-term returns to beneficiaries.
Principles:
• Incorporate ESG issues into investment analysis and decision-making processes. • Active ownership and incorporate ESG issues into ownership policies and practices • Seek appropriate disclosure on ESG issues by entities in which investments are made • Promote acceptance and implementation of principles within the investment industry • Work to enhance effectiveness in promoting the principles • Report on activities and progress on reporting the principles
Equator Principles
Signatories will not finance projects that do not adhere to the following principles intended to promote awareness of Social and Environmental effects of projects
• Review and Categorize – the project based on the magnitude of its potential social and environmental impacts/risks • Project completes a social and environmental impact assessment prior to any work • Project meets performance standards and EHS guidelines • Action plan must include ways to build upon, maintain or establish a social and environmental management system • Consult with project affected communities • Establish a grievance mechanism as part of the management system • Secom to an independent review • Undergo independent monitoring and reporting • Report to EPFI
Principles of Islamic Finance
The main principles of Islamic finance include:
• The prohibition of taking or receiving interest; • Capital must have a social and ethical purpose beyond pure, unfettered return; • Investments in businesses dealing with alcohol, gambling, drugs or anything else that the Shari’ah considers unlawful are deemed undesirable and prohibited; • A prohibition on transactions involving masir (speculation or gambling); and • A prohibition on gharar, or uncertainty about the subject-matter and terms of contracts – this includes a prohibition on selling something that one does not own.
Because of the restriction on interest-earning investments, Islamic banks must obtain their earnings through profit-sharing investments or fee-based returns. When loans are given for business purposes, the lender, if he wants to make a legitimate gain under the Shari’ah, should take part in the risk. If a lender does not take part in the risk, his receipt of any gain over the amount loaned is classed as interest. Islamic financial institutions also have the flexibility to engage in leasing transactions, including leasing transactions with purchase options.
Traditionally an Islamic bank offers two kinds of services:
• Those for a fee or a fixed charge, such as safe deposits, funds transfer, trade financing, property sales and purchases or handling investments; and • Those that involve partnerships in investments and the sharing of profits and losses.
Statement of the Financial Transformation Group (Sept. 1, 2010)
(Draft…still being finalized.) Vision: a world where the financial system serves a flourishing and sustainable human, ecological and spiritual future.
Purpose: A financial system is a commons that instills trust in society, through various activities including:
• Ensuring reliable currencies
• Channeling savings into investment
• Managing payments systems
• Managing financial risks
Principles: In developing global finance as a commons, the finance system would incorporate the following commons principles:
• Stakeholder co-governance, • Access to credit without being blocked by cyclical capital market factors, • Decision-making at the most local level possible (subsidiarity), • An agent for promotion of environmental sustainability and social justice globally.