What's happening at the OECD

Ministers to Discuss Environment and Global Competitiveness

from 28-Apr-2008 to 29-Apr-2008

Environment Ministers from OECD countries as well as from Chile, Estonia, Israel, Russia, Slovenia – countries that are candidates for OECD membership – and Brazil, China, India, Indonesia and South Africa have been invited to discuss cost-effective environmental policies that also bring economic and social benefits.

OECD ministers to discuss climate change, trade and global economy at annual meeting, Paris, 4-5 June 2008 from 04-Jun-2008 to 05-Jun-2008 The economic impact of climate change, rising food prices and a broad range of other trade, growth and development issues will be discussed at the OECD’s annual ministerial meeting in Paris on 4-5 June 2008. France, represented by Christine Lagarde, Minister for the Economy, Industry and Employment, will chair the meeting, with Mexico and Switzerland as Vice-Chairs.

Official visit of the Secretary-General to Sweden from 22-Apr-2008 to 23-Apr-2008 During his official visit, Angel Gurría met with Swedish government officials and gave a lecture at Stockholm School of Economics on "Tax and Growth: What direction should Sweden take?".

More flexibility in labour market policy management would boost growth, says OECD 21-Apr-2008 OECD governments could boost economic growth and help create jobs if local agencies and authorities had more power and autonomy to adjust employment and training programmes to meet local needs, concluded OECD employment ministers.

OECD Financial Markets Committee calls for fundamental reform of financial markets 15-Apr-2008 Fundamental reform of the financial system and its regulation is needed to address the issues highlighted by the current financial markets crisis, according to the OECD Financial Markets Committee. Priority should be given to private sector initiatives to speed up the recovery of financial markets but government intervention may be needed.

Klaus Schmidt-Hebbel appointed OECD Chief Economist 15-Apr-2008 Klaus Schmidt-Hebbel has been appointed Chief Economist of OECD. A national of both Germany and Chile, he joins OECD after twelve years as Chief of Economic Research at the Central Bank of Chile.

OECD countries stay open to commercial investments by sovereign wealth funds

09-Apr-2008

OECD countries are committed to keeping their investment frontiers open to sovereign wealth funds (SWFs) as long as these funds invest for commercial, not political ends. That is the message in a letter from OECD Secretary-General Angel Gurría to G7 Finance Ministers detailing a common OECD position on policies towards sovereign wealth funds.

ANOTHER socialism for the RICH item ..

ECB takes new steps to ease markets

By Ralph Atkins in Frankfurt

Published: March 28 2008 20:34 | Last updated: March 28 2008 20:34

Fresh measures to combat financial market tensions were unveiled by the European Central Bank on Friday, even as scares about eurozone inflation further reduced the scope for cutting its main interest rate.

Extending its armoury, the ECB announced its first injections of six-month money into eurozone markets. A €25bn operation will be launched next week, while a second in July will extend beyond the end of this year. The Frankfurt-based institution will also continue additional injections of three-month money.

EDITOR’S CHOICE

Central banks act to calm financial markets - Mar-28

ECB injects €15bn into money markets - Mar-20

King meets banking executives - Mar-20

ECB study warns on renminbi peg - Mar-13

Editorial Comment: Intervene on dollar’s fall - Mar-13

Trichet signals alarm at euro’s rise - Mar-11

The moves follow recent surges in market interest rates and point to heightened ECB concerns about the unfolding global financial crisis. The measures were aimed “at supporting the normalisation of the functioning of the euro money market”, it said.

But an unexpected acceleration in German inflation on Friday suggested the ECB’s main interest rate would remain firmly at 4 per cent in spite of sweeping cuts by the US Federal Reserve.

Axel Weber, president of Germany’s Bundesbank, expressed alarm about recent inflation trends and hinted interest rates increases could not be ruled out. He said in Luxembourg that the ECB would “act if necessary” to secure price stability.

However, the ECB knows that tougher talk on interest rates could lead to further upward pressure on the euro, which is already at record levels against the dollar and on Friday hit a fresh high against sterling.

Eurozone inflation data on Monday could show the annual rate for the 15-country region rising to a 16-year high of as much as 3.5 per cent this month, economists said. Eurozone growth figures for the first quarter could also be better than expected, said Jürgen Stark, an ECB executive board member.

Since the start of the financial crisis last August, the ECB has drawn a clear distinction between its actions to ease market tensions and its main interest rate policy, aimed at combating inflation. Even though the ECB believed the current level of interest rates would suffice, “the bank is under huge pressure to explain why it is not responding to this surge in inflation”, said Jacques Cailloux of Royal Bank of Scotland.

Copyright The Financial Times Limited 2008

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Sovereign Wealth Funds: Bayh and Webb ure limits

Senators Urge Limits on Foreign Funds

Sens. Bayh, Webb Urge Limits on U.S. Investments by Sovereign Wealth Funds

February 07, 2008:

NEW YORK (Associated Press) - Two senators are calling for more federal scrutiny of foreign government-run funds and their investments in the United States, no matter how small those investments are.

On Thursday, Sens. Evan Bayh, D-Ind. and James Webb, D-Va., said the funds, known as sovereign wealth funds, pose national security threats because they could access U.S. technology and pursue other political objectives though their investments, rather than commercial goals.

The senators' comments underscore continued Capitol Hill concern about foreign government investment in the United States, even though Congress passed legislation last year to increase the regulatory scrutiny of such investment.

Bayh, in remarks before a congressional advisory panel on U.S.-China relations, said security threats could be limited by requiring the funds to take passive stakes that restrict their influence over U.S. corporations.

"It is in our mutual interest to set the standards now," Bayh said, to avoid an "overreaction down the road" similar to the controversy that erupted in early 2006, when a Dubai-based company, DP World, purchased port operations at six U.S. ports. That deal was scuttled in the face of congressional opposition.

Bayh said he has spoken with Treasury Department officials, who are formulating regulations to implement last year's law, which strengthened the Committee on Foreign Investment in the United States (CFIUS).

CFIUS is an interagency panel, chaired by Treasury and including the Defense and Homeland Security departments, among other agencies, that reviews foreign investment for security implications.

In Bayh's view, CFIUS is also a "a largely toothless watchdog" that has placed commercial interests above national security concerns.

If Treasury's regulations don't "strike the right balance," Bayh said, between protecting national security and remaining open to foreign investment, he will seek to hold hearings at the Senate Banking Committee. Treasury is expected to release a draft of the regulations as early as this month.

Sen. Chris Dodd, D-Conn., chairman of the banking committee, has said he is open to holding a hearing this year on sovereign wealth funds.

Sovereign wealth funds from Middle Eastern and Asian countries, including China, have taken a much higher profile in recent months after investing almost $30 billion in several ailing financial services firms, including Citigroup Inc. and Merrill Lynch & Co.

Those investments have resulted in ownership stakes below 10 percent, which U.S. regulators generally consider passive investments. CFIUS generally doesn't review purchases of less than 10 percent, particularly if the foreign buyers don't gain board seats or other levers of control.

But Bayh and Webb said small ownership stakes still give foreign investors influence. Webb noted that Saudi Prince Walid Bin Talal, who owns 3.9 percent of Citi, "was closely consulted" in the removal of Chuck Prince from the bank's CEO position last year.

"Holding a small minority of shares or not taking a board seat does not provide a guarantee that there will be no influence or control," Webb said in written remarks.

Webb said he has urged the Treasury to issue regulations "broad enough to ensure that potential national security implications" of passive investments are "appropriately assessed."

The senators' comments were made in testimony before the U.S.-China Economic and Security Review Commission, a bipartisan panel of former government officials and academics appointed by the White House and congressional leaders.

Robert Dohner, deputy assistant secretary for Asia at the Treasury Department, said in written remarks that current law "ensures thorough reviews" of foreign investments that "pose genuine national security concerns."