UN chief says global finance system fragmenting

EghtesadOnline: The world risks a "great fracture" of its economic and financial systems, UN Secretary-General António Guterres said on Thursday at a summit with Southeast Asia's ASEAN bloc, China, the United States and others in Indonesia.

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08 September 2023

In a wide-ranging speech that touched on geopolitical tension, multilateral development finance and climate change, Guterres called on world leaders to find peaceful and inclusive solutions to the challenges facing the world, Reuters reported.

"There is a real risk of fragmentation – of a great fracture in world economic and financial systems; with diverging strategies on technology and artificial intelligence and conflicting security frameworks," he said.

He called for a mechanism to provide relief for debt-strapped developing economies, to include payment suspensions, longer lending terms and lower interest rates.

He also voiced support for re-channeling an additional $100 billion of International Monetary Fund's Special Drawing Rights through multilateral development banks to increase liquidity and support developing economies' needs.

Rich countries agreed in 2021 to re-channel the unused funds, an international reserve currency, to poor countries.

At a Paris summit in June this year, world leaders backed a push for multilateral development banks like the World Bank to put more capital at risk to boost lending.