Published in The Times, 14 December 2007
Sir, You are right to insist on the importance of reform of the institutions that manage the global economy (leading article, Dec 13). It is increasingly apparent that decisions taken in one country will have an impact on others, so it follows that those decisions must be shared. There is no such thing as purely domestic macroeconomic policy any more.
And you are right also to insist that championing such a reform should be a priority for the EU. The recent visit to China by the Euro group chair Jean-Claude Juncker, the ECB president Jean-Claude Trichet and the European commissioner Joaquin Almunia shows European interest in Chinese exchange rate policy. American politics is full of the same concerns. It is time for a revival of the kind of international co-ordination that led to the Plaza and Louvre accords in the 1980s. In fact, such coordination now needs to be much stronger.
But it is not enough for the reformed financial institutions to be effective. Public concern about the management of the global economy is growing, and the institutions that perform this function will also have to be transparent and accountable if they are to maintain public support. And if the capitalist economy is now globalised, democratic politics must seek to follow suit.
Director, Federal Union