closing the gaps in information and analysis: the global clearinghouse initiative dr. barbara c....

CLOSING THE GAPS IN INFORMATION CLOSING THE GAPS IN INFORMATION AND ANALYSIS: THE GLOBAL AND ANALYSIS: THE GLOBAL CLEARINGHOUSE INITIATIVECLEARINGHOUSE INITIATIVE

Dr. Barbara C. Samuels, IIDr. Barbara C. Samuels, IIPresidentPresident

Samuels AssociatesSamuels AssociatesContact: [email protected]: [email protected]

Presentation Given at The International Business ForumPresentation Given at The International Business ForumThe United Nations Financing for Development ConferenceThe United Nations Financing for Development Conference

Monterrey, MexicoMonterrey, MexicoMarch 18, 2002March 18, 2002

UN Talk.3.18.02.ppt-2-

Executive SummaryExecutive Summary• The Imperative for Closing the Gaps in Information and AnalysisThe Imperative for Closing the Gaps in Information and Analysis

– The Monterrey Challenge: Greater Information Access and Policy ConsultationThe Monterrey Challenge: Greater Information Access and Policy Consultation

– The Monterrey Consensus: A Common Set of ObjectivesThe Monterrey Consensus: A Common Set of Objectives

• The Global Clearinghouse: an Independent Information Initiative Bridging Government and The Global Clearinghouse: an Independent Information Initiative Bridging Government and InvestorsInvestors

– Evolution of ConceptEvolution of Concept

– The Need to Improve Information and Analysis in Decision-MakingThe Need to Improve Information and Analysis in Decision-Making

– Linking Needs to SolutionsLinking Needs to Solutions

– The Missing Link: Expert-Based Networks Focussed on Meeting Investor NeedsThe Missing Link: Expert-Based Networks Focussed on Meeting Investor Needs

• The Four Proposed Networking Functions of the Clearinghouse: Uses and BenefitsThe Four Proposed Networking Functions of the Clearinghouse: Uses and Benefits

– The Global Information Clearinghouse PortalThe Global Information Clearinghouse Portal

– Government - Investor NetworksGovernment - Investor Networks

– Independent Expert GroupsIndependent Expert Groups

– Independent Audits and Performance BenchmarkingIndependent Audits and Performance Benchmarking

• Status and Next StepsStatus and Next Steps

• The Imperative for Closing the Gaps in Information and AnalysisThe Imperative for Closing the Gaps in Information and Analysis

– The Monterrey Challenge: Greater Information Access and Policy ConsultationThe Monterrey Challenge: Greater Information Access and Policy Consultation

– The Monterrey Consensus: A Common Set of ObjectivesThe Monterrey Consensus: A Common Set of Objectives

• The Global Clearinghouse: an Independent Information Initiative Bridging Government and The Global Clearinghouse: an Independent Information Initiative Bridging Government and InvestorsInvestors

– Evolution of ConceptEvolution of Concept

– The Need to Improve Information and Analysis in Decision-MakingThe Need to Improve Information and Analysis in Decision-Making

– Linking Needs to SolutionsLinking Needs to Solutions

– The Missing Link: Expert-Based Networks Focussed on Meeting Investor NeedsThe Missing Link: Expert-Based Networks Focussed on Meeting Investor Needs

• The Four Proposed Networking Functions of the Clearinghouse: Uses and BenefitsThe Four Proposed Networking Functions of the Clearinghouse: Uses and Benefits

– The Global Information Clearinghouse PortalThe Global Information Clearinghouse Portal

– Government - Investor NetworksGovernment - Investor Networks

– Independent Expert GroupsIndependent Expert Groups

– Independent Audits and Performance BenchmarkingIndependent Audits and Performance Benchmarking

• Status and Next StepsStatus and Next Steps


The Imperative for Closing the Gaps in The Imperative for Closing the Gaps in Information and AnalysisInformation and Analysis

• Progressive Deterioration in Risk Predictive Capacity in Countries and Progressive Deterioration in Risk Predictive Capacity in Countries and Markets (Examples: Asia, Long-Term Capital, Enron, Terrorism)Markets (Examples: Asia, Long-Term Capital, Enron, Terrorism)

• Failures in Policymaking and Investor Decision-Making with Massive Failures in Policymaking and Investor Decision-Making with Massive Social CostsSocial Costs

• Widespread Skepticism Undermining Confidence in Governments, Widespread Skepticism Undermining Confidence in Governments, International Institutions, and MarketsInternational Institutions, and Markets

• Universal Call for Enhanced “Accountabilities”Universal Call for Enhanced “Accountabilities”

• Progressive Deterioration in Risk Predictive Capacity in Countries and Progressive Deterioration in Risk Predictive Capacity in Countries and Markets (Examples: Asia, Long-Term Capital, Enron, Terrorism)Markets (Examples: Asia, Long-Term Capital, Enron, Terrorism)

• Failures in Policymaking and Investor Decision-Making with Massive Failures in Policymaking and Investor Decision-Making with Massive Social CostsSocial Costs

• Widespread Skepticism Undermining Confidence in Governments, Widespread Skepticism Undermining Confidence in Governments, International Institutions, and MarketsInternational Institutions, and Markets

• Universal Call for Enhanced “Accountabilities”Universal Call for Enhanced “Accountabilities”

Imperative for Cost-Effective ActionImperative for Cost-Effective Action


The Monterrey Challenge: Greater The Monterrey Challenge: Greater Information Access and Policy Information Access and Policy

ConsultationConsultation

AccessAccess::AccessAccess:: “…“…enhancing the ease of access, accuracy, timeliness, and enhancing the ease of access, accuracy, timeliness, and coverage of information on countries and financial markets… coverage of information on countries and financial markets… would strengthen capacities of risk assessment” (p.4).would strengthen capacities of risk assessment” (p.4).

“…“…enhancing the ease of access, accuracy, timeliness, and enhancing the ease of access, accuracy, timeliness, and coverage of information on countries and financial markets… coverage of information on countries and financial markets… would strengthen capacities of risk assessment” (p.4).would strengthen capacities of risk assessment” (p.4).

Policy Policy Consultation:Consultation:Policy Policy Consultation:Consultation:

“…“…public/private initiatives could include the development of public/private initiatives could include the development of policy consultation mechanisms between international and policy consultation mechanisms between international and regional financial organizations and national governments regional financial organizations and national governments with the private sector in both source and recipient countries with the private sector in both source and recipient countries as a means to create business-enabling environments” (p.4).as a means to create business-enabling environments” (p.4).

“…“…public/private initiatives could include the development of public/private initiatives could include the development of policy consultation mechanisms between international and policy consultation mechanisms between international and regional financial organizations and national governments regional financial organizations and national governments with the private sector in both source and recipient countries with the private sector in both source and recipient countries as a means to create business-enabling environments” (p.4).as a means to create business-enabling environments” (p.4).

Political Consensus Exists for Solving the ProblemPolitical Consensus Exists for Solving the Problem


The Monterrey Consensus: A The Monterrey Consensus: A Common Set of ObjectivesCommon Set of Objectives

DomesticDomestic::DomesticDomestic:: Create enabling environments, mobilize domestic resources; make more Create enabling environments, mobilize domestic resources; make more efficient use of international investment and assistance; consolidate policy efficient use of international investment and assistance; consolidate policy and regulatory frameworks; improve early warning, crisis prevention, and and regulatory frameworks; improve early warning, crisis prevention, and debt managementdebt management............

Create enabling environments, mobilize domestic resources; make more Create enabling environments, mobilize domestic resources; make more efficient use of international investment and assistance; consolidate policy efficient use of international investment and assistance; consolidate policy and regulatory frameworks; improve early warning, crisis prevention, and and regulatory frameworks; improve early warning, crisis prevention, and debt managementdebt management............

InternationalInternational::InternationalInternational:: Attract investment flows to a much larger number of countries; achieve Attract investment flows to a much larger number of countries; achieve transparent, stable and predictable investment climates...that allow transparent, stable and predictable investment climates...that allow businesses...to operate efficiently and profitably...with maximum businesses...to operate efficiently and profitably...with maximum development impactdevelopment impact........

Attract investment flows to a much larger number of countries; achieve Attract investment flows to a much larger number of countries; achieve transparent, stable and predictable investment climates...that allow transparent, stable and predictable investment climates...that allow businesses...to operate efficiently and profitably...with maximum businesses...to operate efficiently and profitably...with maximum development impactdevelopment impact........

Systemic:Systemic:Systemic:Systemic: Enhance coordination among all relevant ministries and other domestic Enhance coordination among all relevant ministries and other domestic institutions; strengthen surveillance... and the timely detection of external institutions; strengthen surveillance... and the timely detection of external vulnerability; ensure progressive voluntary compliance with... codes and vulnerability; ensure progressive voluntary compliance with... codes and standards and... ensure... participation in the formulation...and standards and... ensure... participation in the formulation...and implementationimplementation..........

Enhance coordination among all relevant ministries and other domestic Enhance coordination among all relevant ministries and other domestic institutions; strengthen surveillance... and the timely detection of external institutions; strengthen surveillance... and the timely detection of external vulnerability; ensure progressive voluntary compliance with... codes and vulnerability; ensure progressive voluntary compliance with... codes and standards and... ensure... participation in the formulation...and standards and... ensure... participation in the formulation...and implementationimplementation..........

Consensus Exists on Consensus Exists on HowHow to Solve the Problem to Solve the Problem


The Global Clearinghouse: An The Global Clearinghouse: An Independent Information Initiative Independent Information Initiative

Bridging Governments and Bridging Governments and InvestorsInvestors

ObjectiveObjective::ObjectiveObjective:: Bridge costly gaps between investors and governments in Bridge costly gaps between investors and governments in areas critical to effective mobilization of domestic and areas critical to effective mobilization of domestic and international private sector capitalinternational private sector capital

Bridge costly gaps between investors and governments in Bridge costly gaps between investors and governments in areas critical to effective mobilization of domestic and areas critical to effective mobilization of domestic and international private sector capitalinternational private sector capital

Functions:Functions:Functions:Functions: • Provision of credible timely relevant information on Provision of credible timely relevant information on countries and marketscountries and markets

• Timely, quality assessment of risks and opportunitiesTimely, quality assessment of risks and opportunities

• Use of effective risk management services and strategiesUse of effective risk management services and strategies

• Formulation of effective crisis prevention policies and Formulation of effective crisis prevention policies and country development strategiescountry development strategies

• Development of innovative and effective financing Development of innovative and effective financing mechanismsmechanisms

• Provision of credible timely relevant information on Provision of credible timely relevant information on countries and marketscountries and markets

• Timely, quality assessment of risks and opportunitiesTimely, quality assessment of risks and opportunities

• Use of effective risk management services and strategiesUse of effective risk management services and strategies

• Formulation of effective crisis prevention policies and Formulation of effective crisis prevention policies and country development strategiescountry development strategies

• Development of innovative and effective financing Development of innovative and effective financing mechanismsmechanisms


Evolution of Global Clearinghouse Evolution of Global Clearinghouse ConceptConcept

• Two years of Roundtable discussions with developing Two years of Roundtable discussions with developing country investors, analysts, and policymakers (U.S. country investors, analysts, and policymakers (U.S. Council on Foreign Relations)Council on Foreign Relations)

• Follow-up UN-sponsored study refining Follow-up UN-sponsored study refining recommendations (100 interviews with investors and recommendations (100 interviews with investors and policymakers)policymakers)

• Personal experience (Director of Country Assessment, Personal experience (Director of Country Assessment, Chase Manhattan Bank; Managing Director, Moody’s Chase Manhattan Bank; Managing Director, Moody’s Emerging Markets Service; President, Association of Emerging Markets Service; President, Association of Political Risk Analysts)Political Risk Analysts)

• Two years of Roundtable discussions with developing Two years of Roundtable discussions with developing country investors, analysts, and policymakers (U.S. country investors, analysts, and policymakers (U.S. Council on Foreign Relations)Council on Foreign Relations)

• Follow-up UN-sponsored study refining Follow-up UN-sponsored study refining recommendations (100 interviews with investors and recommendations (100 interviews with investors and policymakers)policymakers)

• Personal experience (Director of Country Assessment, Personal experience (Director of Country Assessment, Chase Manhattan Bank; Managing Director, Moody’s Chase Manhattan Bank; Managing Director, Moody’s Emerging Markets Service; President, Association of Emerging Markets Service; President, Association of Political Risk Analysts)Political Risk Analysts)


The Need to Improve Information and The Need to Improve Information and Analysis in Decision-MakingAnalysis in Decision-Making

• Daunting Challenge for Information and AnalysisDaunting Challenge for Information and Analysis

– Inherent complexity of economic, political, social systemsInherent complexity of economic, political, social systems

– Growing importance of exogenous variables (given increased economic, political, and Growing importance of exogenous variables (given increased economic, political, and social cross-border integration)social cross-border integration)

– Increased influence of financial market behavior and perceptionIncreased influence of financial market behavior and perception

• Limited Supply of Easily Available, Credible, Timely, Relevant Information on Countries and Limited Supply of Easily Available, Credible, Timely, Relevant Information on Countries and MarketsMarkets

– Vastly enlarged potential investor and issuer base (domestic and international) with limited Vastly enlarged potential investor and issuer base (domestic and international) with limited internal analytic capabilitiesinternal analytic capabilities

– Vested interests of free information and analysis (business, political)Vested interests of free information and analysis (business, political)

– Narrow focus of easily-accessible independent research (for example, sovereign fixed Narrow focus of easily-accessible independent research (for example, sovereign fixed income ratings)income ratings)

– Insufficient detailed information relevant to investor and issuer needs (for example, limited Insufficient detailed information relevant to investor and issuer needs (for example, limited evaluations of compliance with codes and standards; major gaps in assessments in rule of evaluations of compliance with codes and standards; major gaps in assessments in rule of law, markets, global risk factors)law, markets, global risk factors)

• Weak Linkage between Information & Analysis and Decision-Making Weak Linkage between Information & Analysis and Decision-Making

– Incentives and compensation systemsIncentives and compensation systems

• Daunting Challenge for Information and AnalysisDaunting Challenge for Information and Analysis

– Inherent complexity of economic, political, social systemsInherent complexity of economic, political, social systems

– Growing importance of exogenous variables (given increased economic, political, and Growing importance of exogenous variables (given increased economic, political, and social cross-border integration)social cross-border integration)

– Increased influence of financial market behavior and perceptionIncreased influence of financial market behavior and perception

• Limited Supply of Easily Available, Credible, Timely, Relevant Information on Countries and Limited Supply of Easily Available, Credible, Timely, Relevant Information on Countries and MarketsMarkets

– Vastly enlarged potential investor and issuer base (domestic and international) with limited Vastly enlarged potential investor and issuer base (domestic and international) with limited internal analytic capabilitiesinternal analytic capabilities

– Vested interests of free information and analysis (business, political)Vested interests of free information and analysis (business, political)

– Narrow focus of easily-accessible independent research (for example, sovereign fixed Narrow focus of easily-accessible independent research (for example, sovereign fixed income ratings)income ratings)

– Insufficient detailed information relevant to investor and issuer needs (for example, limited Insufficient detailed information relevant to investor and issuer needs (for example, limited evaluations of compliance with codes and standards; major gaps in assessments in rule of evaluations of compliance with codes and standards; major gaps in assessments in rule of law, markets, global risk factors)law, markets, global risk factors)

• Weak Linkage between Information & Analysis and Decision-Making Weak Linkage between Information & Analysis and Decision-Making

– Incentives and compensation systemsIncentives and compensation systems


Linking Needs to SolutionsLinking Needs to Solutions• Complexity and ScopeComplexity and Scope of of

Countries, Markets, and Expanded Countries, Markets, and Expanded Investor Base Investor Base

• Complexity and ScopeComplexity and Scope of of Countries, Markets, and Expanded Countries, Markets, and Expanded Investor Base Investor Base

• Expanded Communication Links via WebExpanded Communication Links via Web harnessing expertise across private and harnessing expertise across private and public sectorspublic sectors

• Expanded Communication Links via WebExpanded Communication Links via Web harnessing expertise across private and harnessing expertise across private and public sectorspublic sectors

• Limited Internal Research Limited Internal Research CapacityCapacity of Expanded Investor of Expanded Investor BaseBase

• Limited Internal Research Limited Internal Research CapacityCapacity of Expanded Investor of Expanded Investor BaseBase

• Reduce Research Costs with “One-Stop-Reduce Research Costs with “One-Stop-Shopping” via webShopping” via web, leveraging existing , leveraging existing information and analysisinformation and analysis

• Reduce Research Costs with “One-Stop-Reduce Research Costs with “One-Stop-Shopping” via webShopping” via web, leveraging existing , leveraging existing information and analysisinformation and analysis

• Need for More Easily-Accessible Need for More Easily-Accessible Relevant Independent Analysis Relevant Independent Analysis (reduce “credibility gap”)(reduce “credibility gap”)

• Need for More Easily-Accessible Need for More Easily-Accessible Relevant Independent Analysis Relevant Independent Analysis (reduce “credibility gap”)(reduce “credibility gap”)

• Support Development of Independent Support Development of Independent Analysis and EvaluationsAnalysis and Evaluations

– Provide distribution platform to Provide distribution platform to investorsinvestors

– Facilitate independent expert groups, Facilitate independent expert groups, objective analysis of performance, objective analysis of performance, audits, and benchmarkingaudits, and benchmarking

• Support Development of Independent Support Development of Independent Analysis and EvaluationsAnalysis and Evaluations

– Provide distribution platform to Provide distribution platform to investorsinvestors

– Facilitate independent expert groups, Facilitate independent expert groups, objective analysis of performance, objective analysis of performance, audits, and benchmarkingaudits, and benchmarking

• Insufficient Use of Information and Insufficient Use of Information and Analysis in Investor Decision-Analysis in Investor Decision-MakingMaking

• Insufficient Use of Information and Insufficient Use of Information and Analysis in Investor Decision-Analysis in Investor Decision-MakingMaking

• Enhance Disclosures, Reducing Scope for Enhance Disclosures, Reducing Scope for Information and Policy Arbitrage, Information and Policy Arbitrage, insuring insuring country performance linked to market country performance linked to market responseresponse

• Enhance Disclosures, Reducing Scope for Enhance Disclosures, Reducing Scope for Information and Policy Arbitrage, Information and Policy Arbitrage, insuring insuring country performance linked to market country performance linked to market responseresponse

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The Missing Link: Expert-Based The Missing Link: Expert-Based Networks Focussed on Meeting Networks Focussed on Meeting

Investor and Policymaker Decision Investor and Policymaker Decision NeedsNeeds

• Rating agencies (global and country)Rating agencies (global and country)

• Country Risk Services (global, regional, Country Risk Services (global, regional, country)country)

• Research Organizations (universities, think-Research Organizations (universities, think-tanks, not-for-profit organizations)tanks, not-for-profit organizations)

• Independent Expert Individuals (consultants, Independent Expert Individuals (consultants,

retired policymakers and investorsretired policymakers and investors))

• Rating agencies (global and country)Rating agencies (global and country)

• Country Risk Services (global, regional, Country Risk Services (global, regional, country)country)

• Research Organizations (universities, think-Research Organizations (universities, think-tanks, not-for-profit organizations)tanks, not-for-profit organizations)

• Independent Expert Individuals (consultants, Independent Expert Individuals (consultants,

retired policymakers and investorsretired policymakers and investors))

Real-Time Cost-Real-Time Cost-Effective NetworksEffective Networks

Focused on Focused on Identifying Identifying

Issues, Options, Issues, Options, PerformancePerformance

Independent ExpertsIndependent Experts

• UsersUsers

• ExpertsExperts

• UsersUsers

• ExpertsExperts

InvestorsInvestors

• UsersUsers

• ExpertsExperts

• UsersUsers

• ExpertsExperts

Gov’tsGov’ts

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Global Clearinghouse: NetworkingGlobal Clearinghouse: Networking

Global Global ClearinghouseClearinghouse

• Global Information Clearinghouse PortalGlobal Information Clearinghouse Portal to to increase cost-effective access to existing increase cost-effective access to existing researchresearch

• Country-Investor NetworksCountry-Investor Networks to facilitate to facilitate government - investor (domestic and government - investor (domestic and international) identification of impediments international) identification of impediments and possible remediesand possible remedies

• Independent Expert GroupsIndependent Expert Groups to facilitate to facilitate collaboration between experts across the collaboration between experts across the public and private sectors on identifying public and private sectors on identifying specific financing and policy optionsspecific financing and policy options

• Independent Audits and Performance Independent Audits and Performance BenchmarkingBenchmarking to insure accountability and to insure accountability and bridge credibility gapsbridge credibility gaps

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A Global Information Clearinghouse A Global Information Clearinghouse PortalPortal

(web-based)(web-based)

Existing InformationExisting Information• Country GovernmentCountry Government

• International InstitutionsInternational Institutions

• Private SectorPrivate Sector

• Research OrganizationsResearch Organizations

• Individual ExpertsIndividual Experts

ComprehensiveComprehensive• EconomicEconomic

• PoliticalPolitical

• LegalLegal

• RegulatoryRegulatory

• Codes and Standards, Codes and Standards, Governance, and Governance, and SustainabilitySustainability

Includes all countries worldwide plus:Includes all countries worldwide plus:

• Key global risk issuesKey global risk issues

(e.g., commodity prices, global (e.g., commodity prices, global market developments, global market developments, global financial policies, etc.)financial policies, etc.)

• Industry sectorsIndustry sectors

(e.g., telecommunications, (e.g., telecommunications, technology, etc)technology, etc)

Designed to Meet User NeedsDesigned to Meet User Needs

• Neutral Information ExchangeNeutral Information Exchange

(no bias or vested interest)(no bias or vested interest)

• Summaries with Back-up detailsSummaries with Back-up details

• Performance-trackingPerformance-tracking

“One-Stop Shopping” for

free and pay-for information required for

country investments

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Information Clearinghouse Portal Information Clearinghouse Portal FunctionsFunctions

• Investor, policymakers, and experts use as efficient “ Investor, policymakers, and experts use as efficient “ one-stop-shopping” for one-stop-shopping” for cost-effective accesscost-effective access to all to all relevant information on country investment (risks relevant information on country investment (risks andand opportunities)opportunities)

• Information providers (governments, international and Information providers (governments, international and regional organizations, private sector, research regional organizations, private sector, research organizations, experts) use as organizations, experts) use as cost-effective platform cost-effective platform to distributeto distribute information and analysis information and analysis

• Clearinghouse provides “user-friendly” interfaces with Clearinghouse provides “user-friendly” interfaces with users to users to increase usefulness of information and increase usefulness of information and integration into decision-makingintegration into decision-making, including , including performance benchmarking and summary analysesperformance benchmarking and summary analyses

• Investor, policymakers, and experts use as efficient “ Investor, policymakers, and experts use as efficient “ one-stop-shopping” for one-stop-shopping” for cost-effective accesscost-effective access to all to all relevant information on country investment (risks relevant information on country investment (risks andand opportunities)opportunities)

• Information providers (governments, international and Information providers (governments, international and regional organizations, private sector, research regional organizations, private sector, research organizations, experts) use as organizations, experts) use as cost-effective platform cost-effective platform to distributeto distribute information and analysis information and analysis

• Clearinghouse provides “user-friendly” interfaces with Clearinghouse provides “user-friendly” interfaces with users to users to increase usefulness of information and increase usefulness of information and integration into decision-makingintegration into decision-making, including , including performance benchmarking and summary analysesperformance benchmarking and summary analyses

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Global Information Clearinghouse Portal Global Information Clearinghouse Portal BenefitsBenefits

• Leverages Existing Massive InvestmentLeverages Existing Massive Investment made by made by countries and international organizations to improve countries and international organizations to improve information and transparencyinformation and transparency

• Enhances the Ability of Countries to Receive Benefits Enhances the Ability of Countries to Receive Benefits by providing a positive context for country by providing a positive context for country improvements improvements through performance tracking on key through performance tracking on key investment areas, including codes and standardsinvestment areas, including codes and standards

• Enhances the Capacity of Investors and Policymakers Enhances the Capacity of Investors and Policymakers to Make Quality, Timely Decisions, to Make Quality, Timely Decisions, reinforcing reinforcing accountability and reducing the risk of costly crises accountability and reducing the risk of costly crises and policy miscalculationsand policy miscalculations

• Leverages Existing Massive InvestmentLeverages Existing Massive Investment made by made by countries and international organizations to improve countries and international organizations to improve information and transparencyinformation and transparency

• Enhances the Ability of Countries to Receive Benefits Enhances the Ability of Countries to Receive Benefits by providing a positive context for country by providing a positive context for country improvements improvements through performance tracking on key through performance tracking on key investment areas, including codes and standardsinvestment areas, including codes and standards

• Enhances the Capacity of Investors and Policymakers Enhances the Capacity of Investors and Policymakers to Make Quality, Timely Decisions, to Make Quality, Timely Decisions, reinforcing reinforcing accountability and reducing the risk of costly crises accountability and reducing the risk of costly crises and policy miscalculationsand policy miscalculations

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Clearinghouse Portal Benefits (cont’d)Clearinghouse Portal Benefits (cont’d)

• Enables all Countries to Cost-Effectively Expand their Reach to Enables all Countries to Cost-Effectively Expand their Reach to Investors Worldwide, Investors Worldwide, reducing research and due diligence costsreducing research and due diligence costs

• Reduces Market Reliance on Fixed-Income Country Ratings and Reduces Market Reliance on Fixed-Income Country Ratings and Sell-Side ResearchSell-Side Research, by providing cost-effective platform for , by providing cost-effective platform for independent analysesindependent analyses

• Allows for Integrated Risk AssessmentAllows for Integrated Risk Assessment (macro/micro; external (macro/micro; external risk issues; governance; and sustainability)risk issues; governance; and sustainability)

• Provides a Neutral Nucleus for Developing Country Risk Provides a Neutral Nucleus for Developing Country Risk ProfessionProfession; and the sharing of methodologies and best practices ; and the sharing of methodologies and best practices (focus on technical, not political views)(focus on technical, not political views)

• Enables all Countries to Cost-Effectively Expand their Reach to Enables all Countries to Cost-Effectively Expand their Reach to Investors Worldwide, Investors Worldwide, reducing research and due diligence costsreducing research and due diligence costs

• Reduces Market Reliance on Fixed-Income Country Ratings and Reduces Market Reliance on Fixed-Income Country Ratings and Sell-Side ResearchSell-Side Research, by providing cost-effective platform for , by providing cost-effective platform for independent analysesindependent analyses

• Allows for Integrated Risk AssessmentAllows for Integrated Risk Assessment (macro/micro; external (macro/micro; external risk issues; governance; and sustainability)risk issues; governance; and sustainability)

• Provides a Neutral Nucleus for Developing Country Risk Provides a Neutral Nucleus for Developing Country Risk ProfessionProfession; and the sharing of methodologies and best practices ; and the sharing of methodologies and best practices (focus on technical, not political views)(focus on technical, not political views)

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Country Investor NetworksCountry Investor Networks(web-based)(web-based)

Country Government

• High-level Investor Relations Office

Investors

• Domestic and International

• Existing and targeted• Equity (company and

portfolio) and debt (loans,bonds)

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Country Investor NetworksCountry Investor Networks(web-based)(web-based)

• Provides direct communication between investors (local Provides direct communication between investors (local and foreign) with government via internet, teleconferences, and foreign) with government via internet, teleconferences, meetingsmeetings

• Internet real-time explanations of government policies and Internet real-time explanations of government policies and programs; and reporting on political, economic, and social programs; and reporting on political, economic, and social developmentsdevelopments

• Tracks investor sentiment and issues, capital flows, Tracks investor sentiment and issues, capital flows, sources, decision-making behavior, and possible risks, sources, decision-making behavior, and possible risks, solutions, opportunitiessolutions, opportunities

• Provides direct communication between investors (local Provides direct communication between investors (local and foreign) with government via internet, teleconferences, and foreign) with government via internet, teleconferences, meetingsmeetings

• Internet real-time explanations of government policies and Internet real-time explanations of government policies and programs; and reporting on political, economic, and social programs; and reporting on political, economic, and social developmentsdevelopments

• Tracks investor sentiment and issues, capital flows, Tracks investor sentiment and issues, capital flows, sources, decision-making behavior, and possible risks, sources, decision-making behavior, and possible risks, solutions, opportunitiessolutions, opportunities

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Country Investor Network BenefitsCountry Investor Network Benefits

• Enhances Government Capacity to Mobilize Domestic and Enhances Government Capacity to Mobilize Domestic and International CapitalInternational Capital with maximum development impact with maximum development impact

• Creates Country-Centered Framework for “Customizing” Creates Country-Centered Framework for “Customizing” Global Codes and StandardsGlobal Codes and Standards based on actual priority based on actual priority investor needsinvestor needs

• Provides Cost-Effective Means to Harness Private Sector Provides Cost-Effective Means to Harness Private Sector ExpertiseExpertise in consolidating policy and regulatory frameworks in consolidating policy and regulatory frameworks

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Country Investor Network BenefitsCountry Investor Network Benefits(cont’d)(cont’d)

• Provides Direct Tangible Benefits to Country for Enhanced Provides Direct Tangible Benefits to Country for Enhanced Business EnvironmentBusiness Environment, as investors respond to progress in , as investors respond to progress in fiscal, regulatory, legal, and accounting frameworks and adoption fiscal, regulatory, legal, and accounting frameworks and adoption of standardsof standards

• Reduces the Risk of Capital ReversalsReduces the Risk of Capital Reversals by enhancing market by enhancing market transparency and government capacity for debt management, transparency and government capacity for debt management, early warning and crisis preventionearly warning and crisis prevention

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Independent Expert Groups FunctionsIndependent Expert Groups Functions

• Neutral mechanism to Harness Technical Expertise from Neutral mechanism to Harness Technical Expertise from across the private and public sectors on specific critical across the private and public sectors on specific critical issues in support of policymakers (national, regional, issues in support of policymakers (national, regional, international)international)

• Acts as cost-effective Research & Development (R&D) Acts as cost-effective Research & Development (R&D) Function for daunting unprecedented problems of Function for daunting unprecedented problems of globalizationglobalization

• Serves as Independent Check and Balance on vested Serves as Independent Check and Balance on vested interests (political and business)interests (political and business)

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Found Independent Expert Groups Found Independent Expert Groups Functions Functions (cont’d)(cont’d)

• Includes wide range of in-country and external experts from Includes wide range of in-country and external experts from private and public sectors, drawing on resources of private and public sectors, drawing on resources of international and regional development institutions as well international and regional development institutions as well as private sector expertsas private sector experts

• Established on a “demand” basis, based on priority issues Established on a “demand” basis, based on priority issues identified by countries and investors as requiring focused identified by countries and investors as requiring focused independent expert assessmentsindependent expert assessments

UN Talk.3.18.02.ppt-22-

Examples of Possible Uses of Examples of Possible Uses of Independent Expert GroupsIndependent Expert Groups

• Country Level:Country Level: support development of country and regional development plans, support development of country and regional development plans, design and implementation of second-generation reforms, advise on appropriate asset-design and implementation of second-generation reforms, advise on appropriate asset-liability structures, etc.liability structures, etc.

• Regional and International Level:Regional and International Level: support development of best practices on generic support development of best practices on generic issues such as privatization, accounting, rule of law, domestic banking systems,the issues such as privatization, accounting, rule of law, domestic banking systems,the design of fiscal accounts, etc.design of fiscal accounts, etc.

• IFIs Policy/Program Level:IFIs Policy/Program Level: serve as independent experts on key issues such as the serve as independent experts on key issues such as the design of country adjustment programs, policies on private sector bail-ins, design of country adjustment programs, policies on private sector bail-ins, international bankruptcy mechanism, etc.international bankruptcy mechanism, etc.

UN Talk.3.18.02.ppt-23-

Benefits of Independent Expert GroupsBenefits of Independent Expert Groups

• Improves Quality of Preemptive Analysis and Decision-Improves Quality of Preemptive Analysis and Decision-MakingMaking with direct independent input from varied expert with direct independent input from varied expert sourcessources

• Reduces Likelihood and Costs of Policy MiscalculationsReduces Likelihood and Costs of Policy Miscalculations given increased systemic capacity to pre-test policy given increased systemic capacity to pre-test policy optionsoptions

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Independent Audits and Performance Independent Audits and Performance BenchmarkingBenchmarking

• Provide Credible Audits and Evaluations that can be used by Provide Credible Audits and Evaluations that can be used by local and international investors to support their due local and international investors to support their due diligence, fiduciary, and risk management processesdiligence, fiduciary, and risk management processes

• Provide a Systematic Measurement Tool to Identify Progress Provide a Systematic Measurement Tool to Identify Progress against Objectives ( e.g., National Development Strategies, against Objectives ( e.g., National Development Strategies, Country Disclosure Reports)Country Disclosure Reports)

• Provide a Professional Non-politicized Basis for Provide a Professional Non-politicized Basis for governments, IFIs, and NGOs to focus on priority issues and governments, IFIs, and NGOs to focus on priority issues and required action stepsrequired action steps

UN Talk.3.18.02.ppt-25-

Benefits of Independent Audits and Benefits of Independent Audits and Performance BenchmarkingPerformance Benchmarking

• Increased AccountabilityIncreased Accountability

• Enhanced CredibilityEnhanced Credibility

• Confidence in Country DisclosuresConfidence in Country Disclosures results in increased results in increased flows domestic and foreign investments that are more flows domestic and foreign investments that are more likely to be stable (given higher confidence from likely to be stable (given higher confidence from credible third-party evaluations)credible third-party evaluations)

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The Global Clearinghouse Initiative:The Global Clearinghouse Initiative:Enhanced Information and Analytics Enhanced Information and Analytics

Critical to Realizing Stated ObjectivesCritical to Realizing Stated Objectives

• Precondition for quality, timely decision making Precondition for quality, timely decision making of both of both policymakers and investors (domestic and internationalpolicymakers and investors (domestic and international))

• Reinforces accountability of all partiesReinforces accountability of all parties

• Targets scarce resources on critical issuesTargets scarce resources on critical issues

• Provides contextual framework for public-private Provides contextual framework for public-private partnershippartnership

• Enables coherence by providing results - oriented focus Enables coherence by providing results - oriented focus for collaboration across institutions and sectors - national, for collaboration across institutions and sectors - national, regional and internationalregional and international

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Status and Next StepsStatus and Next Steps

• Initial funding for pilot studies provided by Norwegian Government, Initial funding for pilot studies provided by Norwegian Government, Ford Foundation and UNFord Foundation and UN

• Consultations with governments and investors (Follow-Up Consultations with governments and investors (Follow-Up Dialogue, Wednesday, 4:30-6:00pm, Conference room 10; individual Dialogue, Wednesday, 4:30-6:00pm, Conference room 10; individual meetings)meetings)

• Development of prototypes for Information Clearinghouse Portal Development of prototypes for Information Clearinghouse Portal and Government Investor Networks by end Augustand Government Investor Networks by end August

• Rollout to other countries (if successful)Rollout to other countries (if successful)

closing the gaps in information and analysis: the global clearinghouse initiative dr. barbara c....

Documents

greater information

investor decisionmaking

meeting investor

steps status

proposed networking

monterrey consensus

monterrey challenge

expertbased networks