The coming weeks will present new challenges to government leaders, around the world, as they ponder how to find measures to create new energies in their stalled economies. As there is and always has been a limit on the amount of funds available, leaders will have to make choices between security of the financial system and economic growth.
One of the greatest threats facing the world economies is the extremely high level of uncertainty. Multinational corporations are not going to bring home their billions of dollars to invest in growth and new jobs and small businesses will not risk their enterprise with new investments until we have policies which clarify our national goals pertaining to the allocation of a scarce resource – money – and how it is collected and spent.
How nations regulate their financial institutions and limit their ability to finance healthy economic growth by levying huge fines and requiring high reserve levels will play a critical role.
As for our own regulation versus growth debate here in the U.S., I, for one, wish for a far more effective execution of governance by both executive and legislative branches than we have seen in recent years. Uncertainty about the regulatory future is only one symptom of a significant lack of leadership in defining national purpose, goals and the role of financial institutions in supporting our economic goals.
John Alan James is executive director of the Center for Global Governance, Reporting and Regulation at Pace University in New York City. He is also program director of Pace University's Certified Compliance and Regulatory Professional certificate program.