Crisis erodes trust in free market system: ICC-B

The 'financial tsunami' originating in the United States has created a downward spiral of loss of confidence and trust in the free market system, said International Chamber of Commerce-Bangladesh (ICC-B).
The financial crisis has plunged the world economy into its worst since the great depression of the 1930s. What started as a subprime mortgage crisis in the USA has now gone global and engulfed the G-7 countries and more, said an editorial of ICC-B news bulleting yesterday.
It will require significant coordinated policy actions among the advanced and emerging economies to quickly recover from this economic and financial disaster, the ICC-B said.
The world needs a long-term strategy for streamlining world financial governance, including accountability and transparency to restore confidence on free market mechanisms, the chamber suggests.
People are demanding a new global financial architecture with proper representation of developing country interests.
The Bangladesh financial sector had little exposure to the subprime mortgage securities, and may emerge unscathed. It is in the real economy that the greatest impact is likely to be felt. The country's economy depends critically on exports and inward remittances from its workers abroad.
Trade will clearly be affected, but the extent of the impact is difficult to quantify at this stage. More than two million people are directly employed in the RMG export-oriented sector, while more than 15 million in the backward linkage industries. Their fate hangs in the balance, the chamber observes.
How the crisis will affect expatriate Bangladeshis is also uncertain, and will depend on the economic condition in the destination countries.
The newly elected Bangladesh government will inherit a more challenging set of tasks than any of its predecessors in decades, predicts ICC-B.
Stocks and shares in the US drowned in a sea of red numbers on October 10 and have been subjected to wild fluctuations since then.
While there will be considerable analysis of the reasons for the financial meltdown, inadequate regulation and poor supervision of the banks and investment firms by the watchdog are undeniable, the ICC-B said.