Special Report: Premier Wen's "trip of Confidence" to Europe
Special Report: Global Financial Crisis
DAVOS, Switzerland, Jan. 29 (Xinhua) -- The recent global financial meltdown has pushed governments to play a greater role in the global economy, some economic and public administration experts participated the World Economic Forum 2009 annual meeting agreed.
Governments must act swiftly and vigorously to stabilize markets, said Elaine C. Kamarck, Director of Visions of Governance for the Twenty-First Century at John F. Kennedy School of Government, Harvard University, at a session of the forum on Wednesday.
"Governments must persist," argued Ernesto Zedillo Ponce de Leon, Director of Yale Center for the Study of Globalization, Yale University.
He encountered this problem firsthand in rescuing Mexico's financial sector in the 1990s, when an unpopular decision which cost billions paid for itself many times over by restoring the economy in the long run.
"States will also need to expand their role in regulating markets to reduce systemic risk," noted Angel Gurria, Secretary-General of Organisation for Economic Co-operation and Development (OECD) in Paris.
In the past, markets relied on private sector actors to fill this role, such as rating agencies like Moody's and Standard & Poor's, but the sub-prime mortgage crisis demonstrated the severe shortcomings of this model, he said.
It is unfair to use rating agencies as the "whipping boys", and it was the regulators who "blew it majestically," he said.
Experts participated the session agreed that restoring public confidence will be essential to rebuilding healthy markets, and macroeconomic coordination is important as governments design stimulus packages and new economic policies.
They warned that protectionist trade policies could exacerbate economic problems, and expressed concern that free trade will be curtailed at a time when the global economy needs it most.