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Democratizing Finance and Financial Institutions

Democratizing Finance and Financial Institutions. Prof. Dr.rer.pol. Martin Büscher Protestant University Wuppertal/ Bethel, Institut for Diaconic Science and Diaconic Management (IDM) WCRC-WCC-CWM Consultations October 3rd, 2012, Guarulhos, Brazil. The Sourcerers Apprentice The Story –

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Democratizing Finance and Financial Institutions

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  1. Democratizing Finance and Financial Institutions Prof. Dr.rer.pol. Martin Büscher Protestant University Wuppertal/ Bethel, Institut for Diaconic Science and Diaconic Management (IDM) WCRC-WCC-CWM Consultations October 3rd, 2012, Guarulhos, Brazil

  2. The Sourcerers Apprentice • The Story – • J.W. von Goethe

  3. Five Theses Thesis I • Economics are rooted in Theology.

  4. Economics are rooted in Theology Protestant, calivinist ethics as the basis for the rise of capitalism – spirit of achievement, humble caring and investment Liberal Economics – Adam Smith as a theologian

  5. Economics are rooted in Theology Blunt Secularisation Good Reasons for Protestants to Argue Economically with Authority

  6. Thesis II Economics are disrooted from theology and ethics, in finance in its most anachronistic way

  7. Financial Markets Misrooted Anachronism of normative fundaments of liberal economics Quasi-religious Settings: Markets as benefiary Vacuum of ordering powers in neo-liberal naivte

  8. Financial Markets Disrooted Naivte of Economics in considering contexts Naivte of Theologians to see the need for economic competencies in in actively shaping economic policy

  9. Thesis III For the service of life, financial institutions need a countervailing power. Primacy of politics leads to integrate ethical dimensions.

  10. Countervailing Power IMF-Policy is dominated by group interests, aiming at untamed financial markets (individualistic approach). Normative Considerations in a kosmopolitan framework for service of life are systematically neglected.

  11. Countervaling Power Complete replacement would miss the chance to direct international capital flows. Make use of the institutions with the primacy of politics, replacing the primacy of markets.

  12. Countervailing Power Aim is efficient impacts of comprehensive democratic control and social, ecological and cultural sustainability, not the efficiency of financial markets.

  13. Thesis IV The IMF shareholder structure is replaced by a stakeholder governance

  14. Civil Society replacing Shareholders Accordingly, the board is not only composed of financial experts (share-holder concept), but by governments, trade unions, NGOs, consumer organisations, etc. (stakeholder concept)

  15. Thesis V The serving role of financial markets has to be reestablished. For that a set of instruments can be applied.

  16. Set of Financial Policies Financial Policy Constraints of capital flow, capital control Taxes on capital import Taxes on foreign currency trade (Tobin Tax) Bail-in of private creditors Constraining credits to foreign investors

  17. Set of Financial Policies Cooperation of national financial markets control institutions Guidelines for risk management of banks and insurances Higher taxes on capital gain

  18. Set of Financial Policies Balanced currency exchange rates Limiting offshore markets by the Financial Stability Forum (FSF) Limiting speculation Creating financial markets for economically developing and emerging markets

  19. What can the WCC-WCR-CWM do? Series of Encounters with IMF-Representants and political authorities (Stiglitz Commission, IMF, WTO) Found WCC School of Economics, Governance and Management (SEGM) for economic competencies and empowerment

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