Reforms of the global monetary order need to come back to the centre stage, he said while speaking at an event organised by the Department of Economic Affairs (DEA), Ministry of Finance, and the Indian Council for Research on International Economic Relations (ICRIER) on Wednesday. “You may recall that at the time of the landmark 2009 London summit, Gordon Brown talked of the need for a new Bretton Woods, and, to some extent, the movement for that might be now but in a different form,” he stated.
The Bretton Woods system of monetary management had, in essence, established the rules for commercial relations among the US, Canada, Western European countries, Australia and 44 other countries, after the 1944 Bretton Woods Agreement.
Elaborating further, Bery said that since the Asian financial crisis (in 1997), India has run its macroeconomy essentially to make sure that the current account deficit was around 2% of the GDP and to ensure there was accumulation of reserves. “Now, this is not the ideal configuration of what India needs to achieve as we go forward. We are going to have to increase our investment rate. We are going to want to attract more global finance,” he stated.
Drawing a parallel with Korea, he said when the East Asian nation was in its false growth phase, it was sustaining current account deficits of 5, 6 or 7%. “I am not recommending that for India, but we are in a global financial environment that discourages that kind of risk taking.” He said we are not in a world where global finance is supportive of long-term goals. “If we see ourselves as having the same size of economy as that of, say, the UK or Germany, then our intellectuals should be contributing to a global debate on international monetary reform,” he said.
Under India’s G20 Presidency, a G20 expert group on “Strengthening Multilateral Development Banks” has been constituted, according to a PIB release in March. Some of the objectives of the expert group were to draw up a road map for an updated MDB ecosystem for the 21st century. The release also added how an evaluation of estimates regarding the scale of funding required by and from MDBs to address their and member countries’ increased financing needs for SDG and transboundary challenges needed to be made.