Regulate global finance now!
The global financial crisis is affecting every aspect of our lives, threatening jobs, savings, pensions and public services everywhere.
Today’s crisis is not just another economic downturn. We are living through a systemic crisis, which has had devastating consequences across the globe: a crisis in the unregulated global financial market system that sacrificed long-term investment, jobs, wages, environment and the well being of the planet and its people, for the benefit of a minority. This crisis must be the trigger for a wholesale reform of the global economic order. We have an opportunity to transform the financial status quo. A new paradigm is needed which privileges sustainable development and social justice, not profit for profit’s sake.
Financial reform: Europe is not on the right track!
The financial reforms which have recently been undertaken in Europe are fragmented and have limited scope. EU proposals so far are limited and fall short of what is needed to shape a sound financial system. There is an obvious lack of political will, and some recent short term improvements on financial markets are being used by certain European leaders to avoid legislation, and go back to “business as usual”. That will only lead to increased job losses and new crises. It is simply unacceptable to put citizens at further risk. We must stop this.
Let’s take action!
It’s time for citizens around Europe to raise our voices and demand that the fundamental causes of this crisis be addressed -- we need tough rules to stop the financiers’ folly, and a new framework that better serves the public interest. The unregulated global financial market and economy must be subject to fair and transparent global governance. EU governments and the European institutions must put social justice and a new respect for the planet at the forefront of the debate on financial reform. That’s why it’s so important for Europeans to join forces for financial reform.
Europeans for financial reform
Europeans for financial reform is a coalition of progressive forces, ranging from NGOs to Trade Unions, citizens, academics and progressive politicians, that have come together to spearhead a campaign for real reform in our banking and financial system. The campaign was launched on September 21st 2009, and the coalition is growing, with new members joining our campaign every day (http://europeansforfinancialreform.org/en/user/register).
Our pledges are:
FINANCIAL MARKETS CANNOT GOVERN US!
We are committed to a common goal: reforming the financial markets, so that they serve the real economy and jobs.
The crisis has shown how the financial sector became divorced from the needs of the real economy and real value creation. Radical reform of the financial sector is now of fundamental importance if we want to re-establish its proper role at the service of citizens and businesses and prevent such a crisis from ever happening again.
Looking beyond the immediate response to the crisis, when our economies begin to recover, we must ensure that there is no return to ‘business as usual’.
While this crisis was precipitated by the collapse of the housing bubble in the U.S. and propagated by reckless financial speculation, the underlying causes lie in fundamental economic imbalances that have resulted from three decades of neo-liberal economic policies. There is a need to establish a new model of economic development that is economically efficient, socially just and environmentally sustainable. This model must rebalance the relationship between public intervention and market forces in the global economy; the financial and the real economy; labour and capital; trade surplus and deficit countries; and industrialized and developing countries. Above all, it must bring to an end the policies that have generated massive inequality between and within nations over the past two decades and that are the root causes of the current global crisis.
We want public authority over global finance. We must enhance accountability, mandate and resources of supervisors and strengthen regulation and oversight at both national and European levels.
OUT OF THE SHADOWS!
Out of the shadow!
We need transparency in the whole system, the touchstone of accountability.
The crisis revealed a dangerous "shadow banking system" causing the build up of excessive debt and speculative financial gambling. Both banks and these "shadow banks" created highly complex financial products to repackage and resell debts - at a profit - to enrich themselves and hide the real risks involved. They contaminated the entire financial system through their unaccountable and shady behavior, spawning a global financial casino, playing with our money, our jobs and our economies.
The interests of customers and workers have been sidelined.
The cartel of finance companies over financial markets and regulation must be dissolved. We must throw open the doors on this secret world through new regulation and supervision for transparency and accountability of financial institutions and products. We must enhance accountability, mandate and resources of supervisors.
Sharing the burden of the crisis!
Global financial markets have caused the most serious economic crisis since the Great Depression, over 80 years ago. In response to the current crisis, governments around the globe have been stabilizing and protecting their economies and jobs with taxpayers’ money. Many citizens ask themselves: Who is going to pay the bill for this? Are taxpayers the only ones to pay or will financial markets and investment bankers be held accountable to pay parts of the burden?
GDP represents the wealth produced by a nation. The share of salaries in total GDP has been continuously decreasing in the last decades, and that of capital increasing. The financial sector has contributed to this growing inequality. This is one of the reasons why households have had to raise debt to sustain their living standards. The produced wealth has gone to a tiny global elite including financial executives, not to the vast majority of citizens and workers or even to ordinary employees in the financial sector who serve customers.
At the top of the income scale a culture of massive bonuses has distorted incentives, encouraged reckless risk-taking and had a pernicious economic effect in addition to adding to social inequity. This is also one of the reasons why households have had to raise debt to sustain their consumption. This wealthy financial elite has destroyed thousands of businesses and millions of jobs around the world over the course of this crisis.
As US Congressman Barney Frank made clear: “when a small number of individuals benefit from a particular deal in the tens and sometimes hundreds of millions of dollars, and concurrently workers are laid off, we have a situation which, it seems to me, is wrong”. ´
MAKE TAX WORK!
Protect public finances, shut down tax havens
Citizens pay taxes. Some unscrupulous companies -- including financial institutions that have been bailed out by the taxpayer -- have been shown to have employed the best accountants in town to use tax havens to avoid tax. One fund manager admitted that private equity managers paid less tax than their cleaning ladies! It’s unfair and unacceptable. The money lost to tax havens could help plug the hole in the public finances and create tens of thousands of jobs. The domestic tax system is broken. As the rich pay less inequality grows. International taxation has failed to keep pace with global challenges
A Financial Transaction Tax, Now!
In response to the current crisis, governments around the world have been stabilizing and protecting their economies and jobs with taxpayers’ money. Many citizens ask themselves: Who’s going to pay the bill for this? Are taxpayers the only ones to pay, or will financial markets and investment bankers be held accountable to pay parts of the burden? Taxing the financial sector would enhance fairness. Moreover, this will increase government revenue, which is badly needed to support the transition towards more inclusive, fairer and cleaner societies. While dumping purely speculative, socially useless activities, a financial transaction tax would promote the sustainable, long-term investments that are needed to green our economies. And last but not least, global financial transaction tax of 0.05% could yield revenue of about 1% of nominal world GDP per year. This would provide funding for long-term public investments, to finance global development and climate change. Only through such policies can solidarity at a global level be enhanced.
Stop Speculation! Sustainable finance for sustainable jobs, and a Financial Transaction Tax.
The core purposes of banks were once to secure people's savings and lend to citizens and businesses, to invest in the creation of real value in a productive economy, and to invest in social infrastructure, social services, education and training. The modern banking system turned into quite another beast, serving the narrow interests of financial executives and destroying jobs and businesses through the greatest financial crisis since the 1930s. Moreover, these banks became "too big to fail" and now rely on public support for their continued survival. But they are as yet not lending satisfactorily to citizens and businesses for our economic recovery. The banking system must be made to get back to basics: back to serving real customers; back to supporting real businesses.
RESPONSIBLE BANKING FOR HOUSEHOLDS AND BUSINESSES!
Protect the consumer!
Responsible banking for households and businesses!
Banks need to serve customers and support businesses!
Consumers deserve the best financial advice for their savings, borrowing and investments. Irresponsible banking practices have resulted in lost pensions income, home repossessions and other such tragedies for ordinary families. New consumer and investor protection rules must be put in place to stop this from ever happening again.
Financial institutions must promote responsible sales practices for financial products. Regulation must ensure that remuneration and incentive systems as well as operating practices put customers first – not profits and sales targets.
Extend supervision at all levels to include relevant business and work practices on sale.
Promote responsible sales of financial products for each financial institution with principles on the sale of products and services as well as a proper monitoring mechanism.
We are committed to a common goal: reforming the financial markets, so that they serve the real economy and jobs. The crisis has shown how the financial sector became divorced from the needs of the real economy and real value creation. Radical reform of the financial sector is now of fundamental importance if we want to re-establish its proper role at the service of citizens and businesses and prevent such a crisis ever happening again.
Cécilia Gondard, Global Progressive Forum
Phone : +32 2 284 10 28