1. VENUE: TRANSCORP HILTON HOTEL, ABUJA
WHAT KINDS OF REFORMS ARE NEEDED FOR THE GLOBAL FINANCIAL SYSTEM? BY PROFESSOR DAHIRU HASSAN BALAMI DEPARTMENT OF ECONOMICS UNIVERSITY OF MAIDUGURI P.M.B. 1069, MAIDUGURI TEL.:
BEING A PAPER PRESENTED AT THE CELEBRATION OF 50 YEARS OF CENTRAL BANKING IN NIGERIA, A 3-DAY INTERNATIONAL CONFERENCE ON CENTRAL BANKING, FINANCIAL STABILITY AND GROWTH
VENUE: TRANSCORP HILTON HOTEL, ABUJA
DATE: MAY 4TH – 6TH 2009

2. INTRODUCTION OUTLINE The Global financial System (GFS)
Perspective of the Global Financial Market
The causes of the current Global Financial Crisis
Impact of the Global Financial Crisis.
* Short term Reforms
Bail outs and consumers protection
Creation of Global Coordinating Authority
Discouraging Intellectual Dishonesty
Credit Innovation which should favour aggregate demand
Discourage intellectual dishonesty
Creation of new rules and confidence
Long Term Reforms
Reform in the Political Arena
Reforming existing institutions and creating new one
Introduction of a new Global Reserve currency
Reduction of Greed and Corruption in Global financial system
Concluding remarks

3. INTRODUCTION
The world’s financial system is an integrated system with many material aspect with the merits and de-merits of integration
What are the causes of global financial crisis?
What is wrong with current arrangement of global financial system leading to crisis?
How does the present global financial crisis differ from the Asian crisis?
What are the impacts of the financial crisis at the global level?
What kinds of reforms are needed for addressing the current global financial crisis?
Will the reforms be local, regional or international?
What are the major reforms that might be needed to address the root causes of the financial
crisis?
How will the reform management mechanism give poor countries a chance to protect themselves within the international system?

4. MERITS AND DE-MERITS OF GFS
The GFS permits access to finance and development, better management of country’s and promote the development of local and regional banking sector.
DEMERITS
However, it can expose countries to volatility and loss of macro-economic sovereignty due to Global nature of the economies. The current global financial crisis has affected adversely the GFS and threatened the future stability of the financial markets as well as its negative effect on individual economies in the system with its consequent loss of confidence in the system if not corrected or reformed to take care of the inadequacies.

5. MAJOR INSTITUTION OF THE GFS
PLAYERS
World Bank- provide funding, take up credit risk and offer financial favourable terms
WTO- settles trade disputes, negotiate international trade agreements
IMF- keep account of international balance of payment of members states, act as lender of last resort
Government institution- Tax authorities, CBS, SEC, Exchanges
Private participants- commercial banks, pension funds, hedge funds and private equity
Legal framework and
* Eurozone
* NAFTA
* Commonwealth of Independent Nations (CIS)

6. PERSPECTIVES OF THE GFS
Washington concern approach
Neo-marxist approach
Social democratic approach

7. Causes of Global Financial Crisis
The slump in the US mortgage housing loans
Credit crunch/derivatives
Huge imbalance between U.S (deficit) and some emerging economies surplus (China)
Weak financial institution
Exchange rate problem adjusted by system
Over-the-counter default swaps derivative
Regulatory controls were not adequate

8. IMPACT OF GFS CRISIS
Nationalisation of companies, Fannie Mae and Freddy Mac
Bank run in UK- Northern Rock
Rising unemployment and job looses
Slowing
Fall in foreign reserve of most developing country like Nigeria.
Rising level of poverty about 50million in 2009
Important of GFC on LDCs
Fall in government revenue
Fall in exchange rate
Deficit balance of payment
Falling of capital market
Rising of level of unemployment and inflation

9. ACTION TAKEN
The setting up of a United Nation panel to review some of the roles of the IMF and World Bank. This was done through coordination approach by the world largest economies.

10. Short term reforms Bail outs and consumers protection
Creation of Global Coordinating Authority
Focus on real stability
Discouraging Intellectual Dishonesty
Credit Innovation which should favour aggregate demand
Discourage intellectual dishonesty
Creation of new rules and confidence

11. LONG TERM REFORMS Reform in the Political Arena
Reforming existing institutions and creating new ones
Introduction of a new Global Reserve currency
Reduction of Greed and Corruption in Global financial system

12. CONCLUDING REMARKS
It is obvious from the past and present that market mechanism can not function efficiency without moderate government interaction. The growing culture of greed and pressure of strong financial incentive to engage in dubious practice, and failure of public authorities to prosecutes and punish complex financial crime in years leading to the present crisis and illegalities is a factors leading to crisis.
The reforms whether short or long term should be comprehensive, inclusive and well tialored to provide a suitable GFS.

13. GRATITUDE
I wish to thank the Central Bank of Nigeria and organizers of the celebration of the50years of Central Banking in Nigeria, for giving me the privilege to speak on the important issue relating to the needed reforms in GFS.

14. Thank you for listening