January 28, 2010

In his January 27 Opening Address at the World Economic Forum annual meeting in Davos, Switzerland, President Nicolas Sarkozy of France said it will not be possible to emerge from the global economic crisis and protect against future crises if the economic imbalances at the root of the problem are not addressed. “Countries with trade surpluses must consume more and improve the living standards and social protection of their citizens,” he remarked. “Countries with deficits must make an effort to consume a little less and repay their debts.” The world’s currency regime is central to the issue, Sarkozy argued. Exchange rate instability and the under-valuation of certain currencies lead to unfair trade and competition, he noted. “The prosperity of the post-war era owed a great deal to Bretton Woods [established in 1944], to its rules and its institutions. That is exactly what we need today; we need a new Bretton Woods.” Sarkozy said that France would place the reform of the international monetary system on the agenda when it chairs the G8 and G20 in 2011.

The Republic of Korea’s President Lee Myung-bak, host of this year’s G-20 Summit in Seoul, said on January 28 that the November summit will explore ways to set up a “Global Financial Safety Net” to shield emerging economies from abrupt flows of international capital. Delivering a Special Address to international business leaders and top policymakers at the World Economic Forum, Lee stressed the ongoing global financial crisis that began in 2008 demonstrated the vulnerability of developing countries to sudden reversals in the flow of global capital and said preventive measures are urgently required. The South Korean leader also promised to step up efforts to reach out to non-members of the G-20, which has emerged as the premier forum for international economic policy cooperation, in an attempt to narrow the development gap.

Read the full text of President Sarkozy’s speech here: in English
Read the full text of President Sarkozy’s speech here: in French

Read the full text of President Lee’s address here