World Bank President Robert Zoellick says that, three months into the job, he is confident that the lender organization is getting back on track following the turmoil that led to the resignation of his predecessor.
Zoellick told the bank’s policy-making committee of 24 finance ministers from advanced and developing economies that the private sector should have a bigger role in helping the poor. Zoellick said he would like the bank to work with commercial banks to develop capital markets in developing countries, as a means of encouraging foreign direct investment. Zoellick said it is time for a fresh look at the bank’s strategic direction. “I believe the way to get an institution back on track is to focus on its mission and give people as much energy and drive and a sense of what can be accomplished,” said Robert Zoellick. “People I’ve met at the bank have come to the bank because they want to accomplish something for development and overcoming poverty, and, frankly, there’s a lot of ideas and a lot of energy.”
Zoellick replaced Paul Wolfowitz, who resigned only two years into his presidency amid mounting staff dissatisfaction with his leadership. The World Bank is the world’s biggest multi-lateral lender, this year providing over $25 billion to more than 50 poor countries. While finance ministers were meeting at the World Bank, only a short distance away, leaders of major financial institutions were discussing the recent volatility in world credit markets, particularly in the US.
The head of Germany’s Deutsche Bank said American lenders had been irresponsible in approving loans to borrowers with bad credit records. Retired US central bank president Alan Greenspan described the August and September credit squeeze, in which markets failed to function properly, as an accident waiting to happen. “Something had to give,” said Greenspan. “If the crisis had not been triggered by a miss pricing of US securitized sub-prime mortgages, it would have eventually erupted in some other sector of the market.”
Critics say Greenspan himself was part of the problem, since he encouraged lending to individuals with less than excellent credit reports. Some analysts say he also may have unwittingly promoted reckless lending practices by keeping short-term interest rates at historic lows for too long. Earlier, finance ministers from the major industrial countries stepped up their insistence that China accelerate the revaluation of its currency. (voanews.com)