"The global economy is characterised by a predominance of finance over the real productive economy. What this means in practice is that Wall Street is once again announcing record profits at the same time as the worldwide unemployment figures continue to stagnate." On that chastening note the IPU President opened the 2010 Parliamentary Hearing at the United Nations.

The two-day joint event was attended by the President of the UN General Assembly, Mr. Joseph Deiss, whose opening remarks set out his vision of a strong United Nations exercising leadership in the global governance system in which Parliaments were instrumental in providing political support, adding that they had an important role to ensure accountability and transparency.

A first session on current risks to economic recovery concluded that the global recovery was too weak to generate enough jobs to sustain further growth and that more stimulus was needed. Opinions were more divided on how to support the economy without adding to the public debt. Better coordination of national macroeconomic policies was needed at the global level. Though the G20 was currently the only body able to assist with this, the question of how to empower the UN as the more legitimate institution for global governance needed an answer.

The global crisis started in the financial sector and it was there that much still needed to be done. Recent Basel proposals to regulate the banking industry worldwide by a common standard generally aimed in the right direction. IPU and parliaments could use their clout to ensure that the proposals are adopted.

A session on reforming the international financial system called for better international cooperation to stabilise currency exchange rates. A basket of currencies as a reserve system was both inevitable and ultimately preferable to predominance by a single currency. A long-standing proposal for a tax on short-term, speculative financial flows was favourably received. The tax would have nearly zero transaction costs and provide a stable source of financing for development.

A session on environmental governance concluded that the root of the environmental problem was that consumption and production were still well above the earth’s carrying capacities. Solving this would require obtaining greater efficiencies, but also a stronger move toward a green economy. Consumption of material goods should shift toward public goods like education, culture, and health care that produced less strain on the environment and a high return in terms of human development. Many also spoke in favour of a global carbon tax to help support green technology transfers, or help pay for climate change mitigation and other environmental projects in developing countries.

For more information including the meeting blog see a special page on the IPU website.