Page 34 - Abyssinia Busniess Network November 2019

Ironically, governments themselves are standard internationally designed possible route is to align better
facing falling credit ratings thanks to regulatory framework adopted by with Sovereign Wealth Funds,
the entirely predictable failure of the virtually all countries around the which are currently holding
austerity policies that were designed, world, similarly need to be more at least $7 trillion of assets by
in part, to please credit-rating agencies’ flexible. At present they treat all recent estimates, but typically not
expectations. This mess reveals once types of banks the same, and hence directed towards developmental
again that the notion of “independence” penalize institutions with long-term lending.
between governments and the banks they or riskier exposures which is the
own is an illusion and not a desirable usual terrain chosen for public and Others include increasing the
one. UNCTAD has in the past called particularly development banks. pool of resources by bringing in
for a review of the power of credit- Moreover, although Basel rules are new countries as shareholders;
rating agencies and today’s challenges adopted by national jurisdictions, or seeking a more integrated
reinforce this. It is perhaps time to they also affect multilateral and approach between such financial
design a new metric for evaluating large regional development banks, at institutions and regional capital
public investment projects that more least indirectly. markets, whose potential has, to
accurately assesses their social and date, been underexplored.

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economic dimensions, rather than being The banks that suffer most are the ll this requires rejection of the
based on narrow financial measures and smaller regional banks that end up notion that markets always
ideological biases. holding too much capital for the know best. There is a growing
total of loans they provide. At the acknowledgement of the idea
What is also important is the wider same time there is the paradox that, that governments should
regulatory environment in which public even as regional developmental underwrite risks, staunch leaks
banks operate. Global rules need also needs are so severe, the banks and fill gaps left by private
to be refigured in light of the new that serve such regions are often banking but public banking in
needs. The need to review trade and dismally small. There is, therefore, the past has proved to be catalytic
investment agreements that bind the an urgent need to find ways to and game-changing; the current
ability of policymakers to use capital capitalize such banks so that they situation offers opportunities to
management policies was suggested can support national country needs play this role again.
above. The Basel norms and rules, a and also regional projects. One

32 Abyssinia Business Nework ህዳር 2012 / November 2019