Sri Lanka president calls for new world financial order

Mahinda Rajapaksa
Image caption Economies, not just institutions are deemed too big to fail, President Rajapaksa said.

The president of Sri Lanka has called for a new financial order to prevent future world financial crises.

President Mahinda Rajapaksa said the industry had been mainly focusing on regulating institutions since the 2008 downturn.

But he said the emphasis needed to move to managing economies that had a global impact.

President Rajapaksa singled out the US as needing to act with more global responsibility.

He accused Washington of injecting "massive quantities of new money" which would have a "massive negative impact on the world".

'Double standards'

Addressing a regional summit of bank governors in Colombo, Mr Rajapaksa said the world had learned individual and common lessons from the crisis which had shaken the very foundations of the global financial structure.

There was therefore a need for a new financial order, and a model that would better equip the world to face similar crises in the future, he added.

President Rajapaksa commended financial communities for deciding to regulate and supervise the financial institutions which were considered "too big to fail".

But he added that "by the same token, it is also necessary for the worldwide financial community to focus upon the management of economies that have a global impact, and therefore have become 'too big to fail'."

Opening the South East Asian Central Bank Governors' (SEACEN) Conference, the Sri Lankan president said "double standards, the obvious policy contradictions and inconsistencies, the stubbornness of large economies to face realities and attempts to politicise multi-lateral financial organizations" had been the main causes of the global economic crisis.

Pointing to the US as an example, Mr Rajapaksa called upon "globally influential economies" to act in a "globally responsible manner" without putting their partners in danger.

"Many economic analysts have pointed out how the world has been anxiously watching while massive quantities of new money were injected by [the] USA into their economy, and through such infusion, into the entire world," he said.

"It is widely expected that such infusion, while possibly stimulating growth and employment within the issuing nation, would have a massive negative impact on the rest of the world in time to come."

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