OECD 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. OECD Secretary General Angel Gurría said 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,” he told participants at a briefing seminar organised by the European Policy Centre in Brussels.
The OECD action plan will be organised around two pillars, he said. “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,” Gurría said.
Looking beyond financial markets, however, he emphasised that 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,” he said. “While social safety nets are in place in OECD countries, there will be a need to step up re-training efforts for those who have become unemployed. There may also be more pressure to help those who are in danger of losing their homes.” Finally, Mr. Gurría emphasised the urgency of keeping policy attention focused on other major challenges. “The current economic crisis demands tough decisions now, but it must not distract our attention from the other grave structural challenges that we confront.” Governments must hold fast to their efforts to address poverty, inequality and climate change, he said. “It is crucial, in the middle of the storm, that we don’t lose our sense of direction… that we keep our commitments to scale-up development aid, to keep global trade and investments open, to develop cleaner energy to protect our environment.”