The Vatican's Calls for Global Financial Reform
Last October, a bold proposal to reform the global financial system came from an unexpected source: the Catholic Church. As the eurozone teetered on the brink of economic chaos, the Pontifical Council for Justice and Peace -- a body of the Roman Curia that advises the pope on economic justice, peace, and human rights -- issued "Towards Reforming the International Financial and Monetary Systems in the Context of Global Public Authority" (more simply called the "Note"). The Council's goal in publishing it was explicit: the Church wanted to attract the attention of world leaders as they assembled to discuss ongoing turmoil in financial markets at the G-20 Summit in Cannes and to add its voice to those arguing for capital controls (such as the "Tobin tax") to discourage international financial speculation. Then, early last month, during his keynote speech for the New Year to diplomats accredited to the Holy See, Pope Benedict XVI reinforced the call for ethics in the global economy. The Pope's words echoed the Note's urgent call for new, even radical thinking about the rules and institutions governing the global economy.
The Note argued that the root cause of today's economic woes is the growth of excessive credit and monetary liquidity in the past few decades, which, in turn, inflated asset bubbles and set off a succession of debt and confidence crises. It also held that the lack of regulatory controls on international finance exacerbated the problem -- in other words, that the pace of economic globalization has been out of control. The resulting instability and economic inequality means that the world now requires "a system of government for the economy and international finance." Once world leaders recognize, the Council argued, that increasing global interdependence is forcing countries to move beyond a Westphalian, or state-based, international order, they will be more prepared to cede their own sovereignty in the interests of global humanity's common good.
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