Miller Center

Media Contact: Howard Witt, 434-924-6051

The 2008 Mortimer Caplin Conference on the World Economy: Conference Statement

The Leaders gathered for this first-of-its-kind Global Summit call for new policy approaches to address today's turmoil and tomorrow's challenges, helping inform current policymakers and the Finance Ministers of the future.

FIXING A BROKEN FINANCIAL SYSTEM: Recent events in the U.S. underscore the need for a strengthened policy framework for market participants and regulators to minimize spillover effects from the underpricing of risk and excessive leverage. This also calls for all institutions engaged in similar actions to be regulated in a common fashion, creating a level playing field for market participants, and minimizing risks to stability. At the same time, these responses need to be balanced in order preserve growth and innovation. More rapid convergence of national standards and greater cooperation of national authorities will also help maintain these benefits, while minimizing the costs of contagion. The financial industry should be held accountable for promises made to strengthen risk management, credit underwriting and lending standards, and compensation reform.

REMAKING INSTITUTIONS FOR NEW TIMES: The global institutions risk irrelevance, and need to be remade to become more effective. We need a "G-next" that includes China, India, and Brazil; a World Bank that focuses on poverty and sustainable growth; a more inclusive IMF that is empowered to head off crises and deal with the spillover effects of national economic policies; and a strengthened forum such as the G-20 for systemically important economies.

WELCOMING JOB CREATING INVESTMENT: Growing pools of investment capital play a critical role putting savings to work to create jobs. As long as cross border investment is based on commercial principles, it should be welcomed. The Santiago agreement on Sovereign Wealth Funds points in the right direction and should be adopted. Screening of investment based on national security concerns should be predictable and not used to erect barriers.

MOVING TO SUSTAINABLE GROWTH POLICIES: While strong growth is essential for raising living standards, future growth will not be sustainable if it follows the resource patterns of the past. Future pressures for energy and food, as well as from demographic shifts and a changing climate, will require incentives for more efficient use of scarce resources and resolve against inflation to make growth more sustainable. These goals are supported by a renewed effort to conclude the Doha Round of multilateral trade negotiations, as well as the Copenhagen climate change negotiation process.

The global system based on the principles of trade, open and competitive markets, and free flows of labor and capital, which has been so effective in raising incomes and lifting people out poverty, still offers the best foundation for ordering economic activity to face present and future challenges.

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