"Global finance system partly to blame for inequality, says World Bank"

" \n Global finance system partly to blame for inequality, says World Bank \n \n\n \n World Bank President David Malpass on Monday said fiscal and monetary policies were operating in \u201cuncharted territory\u201d since the start of the COVID-19 pandemic and may be contributing to a sharp rise in global inequality and poverty. \n \n\n \n Malpass told a roundtable hosted by Chinese Premier Li Keqiang the number of people in extreme poverty had increased by over 100 million since the beginning of the pandemic even as global spending has increased to an all-time record. \n \n\n \n Advanced economies have rebounded, while the poorest countries had seen only a weak rebound, or none at all, he said. \n \n\n \n This was causing \u201ctragic reversals\u201d in median incomes, women\u2019s empowerment and nutrition, he said, and inflation, supply chain bottlenecks, and high energy prices were aggravating these trends. \n \n\n \n \u201cPart of the inequality problem is global finance itself and the unequal structure of the stimulus,\u201d Malpass said, noting that prevailing sovereign debt, fiscal and monetary policies were adding to inequality. \n \n\n \n Read This: SSA: Nigeria, Ghana most likely to experience worsened food insecurity as food inflation soars \u2013 IMF \n \n\n \n Malpass said monetary policy in the advanced economies had long focused on reserve requirement ratios and limited growth in bank reserves to achieve stability in currencies and prices, an approach still used by China. \n \n\n \n Other major central banks had switched to a \u201cpost-monetarism system\u201d of using very large amounts of excess bank reserves to purchase and hold long-duration bonds and other assets, which he said provided price support for a highly select group of assets. \n \n\n \n That approach, he said, excluded small businesses and developing countries, while restraining policy through regulation of liquidity and bank capitalization ratios. \n \n\n \n Fiscal policy was also channeling resources to narrow groups within major borrowers, while leaving others behind, and sovereign debt policies were contributing to inequality. \n \n\n \n Malpass repeated his call for greater transparency in debt contracts and a freeze in debt payments for countries with unsustainable debt. He said creditors should move away from collateral and escrow arrangements. \n \n\n \n \u201cAs one of the largest creditors of developing countries, China\u2019s active participation and strong voice in debt reduction efforts are very much needed and would benefit all participants by encouraging sustainable investment and debt,\u201d he said. \n "

"Global finance system partly to blame for inequality, says World Bank"

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