Thursday, 6 November 2008

El Escorial statement stresses ‘New Green Deal’

The civil society network BankTrack has released Bank to the Future: El Escorial Statement on Banks and the Financial Crisis today in Madrid. The statement was drafted at BankTrack's annual strategy meeting, held in El Escorial de San Lorenzo earlier this week. It contains BankTracks´ current position on what is needed to deal with the unfolding financial crisis of today so that it will lead to a sustainable, robust and just financial system in the future. The statement recognizes that the world financial system is at the brink of collapse. It characterizes the current crisis as not only an economic and financial crisis, but one of governance and sustainability.

The statement stresses the need for a ´New Green Deal´. Such a deal would not seek to stabilize the economic system as it is, but also aim to transform it into one that helps solve the pressing social and environmental problems the world is facing. The fiscal spending that is necessary to stimulate crisis-affected economies entering recession should be directed at achieving social justice, the promotion of sustainable production and consumption systems, and the transition of the world’s economies onto a low carbon path.

The statement outlines a number of steps to deal with the crisis in each of these dimensions, including:

• eliminating the influence of banks in the political process
• ensuring democratic participation in the design of a new global financial order
• putting a "sustainable twist" on international banking rules (such as including environmental and social risks into capital adequacy requirements)
• ensuring complete bank transparency regarding risk assessment processes and transactions
• eliminating the shadow banking sector by introducing regulations and reporting requirements
• prohibiting speculation in the derivatives markets, particularly those related to food and energy
• reducing incentives for excessive risk taking, such as eliminating short-term, volume-driven bonuses.

The Statement concludes, "We face a time of dramatic change that presents unique opportunities. Now that the once-dominant forces of market fundamentalism have been discredited, a new, equitable, and sustainable future can be built on the rubble of past excesses."

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