James D. Wolfensohn, President of the World Bank Group, addressed the inaugural ceremony of the Annual Forum for APEC Finance and Development Program (AFDP) Sunday in Beijing. Following is the full text of his address:
OPENING ADDRESS -- APEC FINANCE AND DEVELOPMENT FORUM
James D. Wolfensohn
The World Bank Group
Vice-Premier Wen, Minister Xiang, it is a great honor for me to open this inaugural session, of the inaugural event, of the APEC Finance and Development (AFDP) Forum. I am particularly pleased to welcome such a distinguished group of policy makers, renowned academics, senior government officials, and private sector executives from China and neighboring countries.
We, in the World Bank, feel privileged to be co-sponsoring this event with the Chinese Government. I am also pleased that our Chief Economist, Nick Stern, will be representing us in today's discussions -- a testimonial to the importance that we attach to this initiative.
I personally would like to congratulate the Chinese authorities for taking the lead in establishing the AFDP, and for having the foresight to pursue the overarching theme of AFDP: improving financial intermediation for economic growth, development and stability.
Much effort has been devoted over the last several years, particularly in this region of the world, to restructuring financial systems to remedy the problems that became painfully evident over past five years. Much progress has been made in addressing the principal causes of the Asian crises -- over-leveraging, excessive foreign currency debt, weak corporate and financial sector governance, and ineffective official supervision of financial systems. Rebound from the Asian financial crisis exceeded most expectations but that should not lull us into complacency. We cannot be content with having stabilized national financial systems. The debilitating effects of possible contagion on regional economies following any financial fall-out by any country, makes this meeting even more important and crucial. It is critical that you build the regional financial systems here into dependable network and know that each economy is dependent on the others. It is a single world and the Asia Family will continue to live in one world with itself and with the rest of the world. You know, probably, more than any other group, that a sound and robust financial system is fundamental to growth and poverty alleviation, employment creation and economic stability. Good financial systems promote these outcomes, weak systems threaten them.
You will cover a number of themes in today's discussion. From my perspective let me just offer a few observations.
We need to be ambitious.
We must pursue financial sector development that creates in each country a diverse and competitive financial services industry that fosters innovation and growth of national economies as they become increasingly integrated in the global economy This integration itself offers substantial opportunities for expanding the range of financial products and services available in APEC member countries (by importing and exporting high quality financial services). Taking full advantage of such integration is one of the challenges that I believe China will work hard to achieve as the nation embraces WTO obligations.
We must go beyond seeing banks largely as mobilizers of savings -- which China and other Asian countries have done extremely well -- to financial intermediaries responsible for seeking out productive investments wherever they might be in national economies. In particular, this means doing a much better job of evaluating the performance and substantial growth potential of small firms which presently are underserved by financial systems in many countries. Here again I congratulate the Chinese authorities for adopting this challenge as one of the principal areas of focus under the AFDP.
We have come a long way in this effort. But we must not stop there.
We must go beyond seeing the financial sector challenge as developing sound banks, and focus more on building capital markets which provide new means for companies to strengthen and diversify their financing structure, reduce financing costs and better manage financial and other risks and from my experience, the prerequisite for capital markets to flourish is that governments have created a deep and liquid government bond market.
The shared experience of the APEC members in pursing these and other objectives can provide valuable insights for such discussions and thus can help shape the research and training activities that comprise the AFDP.
Let me conclude by thanking you for the opportunity to open this Forum. The issues that you will be discussing are vital to the realization of the full economic potential of the APEC members. Your success will contribute even further to the impressive achievements that have already been made in reducing poverty and raising living standards. For these reasons, the World Bank is strongly committed to collaborating with the Chinese authorities in promoting the success of the AFDP.
(www.china.org.cn May 26, 2002)