Finance ministers of Brazil, Russia, India, China and South Africa (BRICS) today called for effective regulation of international financial markets and banking systems in order to provide access to trade credit, which, they said, is important for trade to flourish.
Access to affordable credit facilities has an important role in promoting trade and trade cannot flourish without a stable international financial environment, on account of the interconnectedness of the financial markets, BRICS said in statement.
This calls for better and more effective regulation of financial markets and supervision of the banking system. Regulatory failures in financial markets can lead to financial crises and in turn adversely affect the availability of trade finance. Excessive liquidity in some countries impacts others as well.
Trade can create growth opportunities and trade reforms can reinforce an effective development strategy. But to ensure this, complementary policies are needed such as sound macroeconomic management, efficient trade institutions, investments in human capital and infrastructure, adjustment support, and the rule of law, BRICS said in a statement.
A level playing field, that addresses the current inequities in global trade, is also essential. In particular, trade rules and market opening should apply to all economic sectors, including agriculture, while incorporating special flexibilities and ''policy space'' for developing countries, BRICS said.
The net employment effects of increased trade may be positive if other country specific factors such as functioning of the labor and product markets, competitiveness of specific sectors and general macroeconomic framework, act in a favourable manner.