Lucky Fiakpa
24 November 2008
The UN has decided to wade into the global financial crisis with the assemblage of top rated economists from around the world, including the CBN governor, Prof. Chukwuma Soludo, to come up with a working solution to the problem.
The best of US financial experts have been putting their heads together to get their country out of the current financial meltdown triggered by the sub-prime crises in the US. Congress passed a bill approving a bail out plan of some $700 billion to tidy the economy from the mess. But that has not stopped the economy from wobbling.
The automobile sector is currently on bended kneel pleading for a bail out as well from Congress but their request is still pending.
In Europe, the situation is not different. The best of UK economists are also working round the clock in search of good strategy to stabilize the economy. Germany, the strongest economy in Europe, is also catching cold as a result of the financial crisis. Russia economy is also lying prostrate.
The Asian economy is not spared of the financial bug. Japan has been sneezing ceaselessly since US demand for their exports dropped as a result of the crisis. China and several other Asian countries have been coming up with several options on how best to tackle the problem.
But when the world, under the platform of the United Nations, UN, decided to tackle the problem, an assemblage of the best economists around the world was pooled for the job and Nigerian Central Bank governor, Prof. Chukwuma Soludo, was picked to join the team.
The high-level task force being set up by the United Nations to examine the possible reform of the global financial system, including the International Monetary Fund (IMF) and the World Bank, in the wake of the current economic turmoil was made known last week.
United Nations General Assembly President Miguel Descoto, who announced the composition of the task force, said Joseph Stiglitz, a former Chief Economist at the World Bank and winner of Nobel Prize for Economics, will chair the panel known as the Commission of Experts on Reforms of the International Monetary and Financial System. "The task force will suggest steps that member states can take to secure a more stable global economic order," he said in a statement issued by the UN News Service.
Many economies are either into recession or are slipping into recession as a result of the financial crisis brought on by the sub-prime credit crisis in the United States.
Others in the panel include a Malaysian, Jomo Kwame Sundaram, the Assistant Secretary-General for Economic Development in the UN Department of Economic and Social Affairs (DESA), and a former lecturer with Univesiti Malaya and Universiti Kebangsaan Malaysia, and Jose Antonio Ocampo of Colombia, a former Under-Secretary-General for Economic and Social Affairs.
Also in the panel are Jean-Paul Fitoussi, Professor of Economics at the Institute dEtudes Politiques de Paris in France, Avinash Persaud of Barbados, who is Chairman of Intelligence Capital Limited and Yaga Venugopal Reddy, former governor of India's Reserve Bank.
Japan's Eisuke Sakakibara, who was once dubbed "Mr Yen", and now Professor at Waseda University in Tokyo, is also in the panel, along with China's Yu Yongding, the Director of the Institute of World Economics and Politics.
When Descoto announced the formation of the panel last month, he said: "There is growing recognition that the current turmoil in the financial system cannot be solved through piecemeal responses at the national and regional levels but requires a coordinated effort at the global level".
Although Nigeria had a fair bout of the financial crisis, Soludo never adopted any panic measure. Instead, he embarked on a campaign to whip up investors' confidence in the market. At several fora, the CBN governor made it known that the Nigerian banking system was strong and there was no need for panic. But in the event of distress arising from the global crisis, Soludo also made it known that the CBN was up and ready to assist any bank found in such situation.
Since most Nigerian banks caught in the crisis were those heavily exposed to capital market activities, the Central Bank directed that such banks should restructure such facilities so as not to be weighed down by such assets. Under the prudential guidelines, such facilities were supposed to have been written off from their books as bad debts after a given period of time. This would have affected some of the banks operations.
There was also the share buy back scheme which allowed banks to buy back their shares in the market to promote investors' confidence in the market. Although no bank has taken advantage of this scheme, it was nonetheless seen as a confidence booster for the market.
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