Investors react to the market slump.
Organization for Economic Co-operation and Development is preparing a two-pillar action plan for governments, as part of a global response to the world financial crisis, calling for tighter regulation and oversight of financial markets and improved national policies to promote economic growth.
The action plan would cover a wide range of areas, from financial regulation, corporate governance and fiscal policy to competition, employment policy, insurance and pensions. The causes and consequences of this crisis are rooted in a wide set of inter-related policy areas and can only be addressed through integrated responses. The two pillar action plan organized as – First, align regulations and incentives in the financial sector so that market operators act in a tighter oversight and risk management environment. Second, review and upgrade national policies and improve policy coordination at the international level to restore the conditions for economic growth.
One of the key lessons of the financial crisis has been the critical importance of efficiently functioning financial markets for the stability of the real economy. That efficiency relies not just on competition but also on effective regulation and supervision. Looking beyond financial markets, governments must also play their part in sustaining economic activity. Automatic fiscal stabilisers are already helping to cushion the downturn, especially in Europe. But more needs to be done.
“Governments must hold fast to their efforts to address poverty, inequality and climate change. It is crucial, in the middle of the storm, that we don’t lose our sense of direction, we keep our commitments to scale-up development aid, to keep global trade and investments open, to develop cleaner energy to protect our environment.” Said: OECD Secretary-General.
Source: OECD
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