BAKU, Azerbaijan, September 23. The G20 (T20) expert group has adopted proposals and published policy briefs prepared by the Eurasian Fund for Stabilization and Development (EFSD) within the framework of the subgroup on reforms of multilateral development banks, Trend reports.
According to the EFSR, the papers “Enhancing the Coordination and Outreach of the Global Financial Safety Net” and “Improving the Focus of Multilateral Development Banks to Support Sustainable Development in the Face of New Challenges” are already available on the official T20 website.
The EFSR experts emphasize the need to expand the coverage of the Global Financial Safety Net (GFSN), which is a multi-layered system of international financial mechanisms. It includes national reserves, bilateral swap arrangements, regional financial mechanisms, and the International Monetary Fund (IMF).
The EFSD serves as such a mechanism in Eurasia, the European Stability Mechanism (ESM) in Europe, the Latin American Reserve Fund (FLAR) in Latin America, the Arab Monetary Fund (AMF) in the Middle East and North Africa, and the Multilateral Chiang Mai Initiative (CMI) in Southeast Asia.
Despite their different objectives, regional mechanisms share the common goal of ensuring economic and financial stability. Their advantages are speed of decision-making, flexibility, and proximity to member countries. However, EFSD representatives emphasize that about half of the countries have access to only two elements of the GSFB: national reserves and the IMF. While regional mechanisms do not cover all countries, which increases inequality in the distribution of financial support and reduces the effectiveness of the fight against global crises.
One of the proposals of the EFSD was the establishment of an African Stabilization Mechanism that could close the gaps in coverage of the continent. In developing countries actively attracting assistance from international donors, it is necessary to strengthen coordination between financial organizations and development agencies through special platforms, which are already working successfully in Kyrgyzstan and Tajikistan.
To note, the Eurasian Fund for Stabilization and Development (EFSD) is a regional financial mechanism with a volume of more than $9 billion that was established in 2009 by the Republic of Armenia, the Republic of Belarus, the Republic of Kazakhstan, the Republic of Kyrgyzstan, the Russian Federation, and the Republic of Tajikistan. The objectives of the EFSD are to promote economic and financial stability in the Fund's member states, as well as to support their sustainable development.