Madam Speaker, it is a pleasure to return the debate to the subject of the hon. member for Regina—Qu'Appelle's resolution.
We had only one reservation about the resolution and he has very gracefully accepted our suggestion for a change. I would like to enter into the record that the finance minister has been concerned with this issue for at least four years. He did raise it at the Halifax reunion referred to in 1995. It has recurred in discussions at the World Bank and the IMF in Washington and again at the Kuala Lumpur informal meeting of the APEC leaders.
It is a subject we are very concerned with. The economist who gives his name to the tax proposed is not some obscure ivory tower economist. He has been working in the practical world of economics. Apart from his Yale professorship, he was an adviser to President Kennedy on the crucial financial banking policy making that President Kennedy's administration was engaged in.
Returning to this subject, it directs attention to the problem of our times of the breakdown, as in other areas of the world community, of international institutions that were conceived for other purposes and have to be readjusted and remade to accord to new conditions. I am referring of course to the breakdown of the Bretton Woods system which in essence over the last half century has governed world banking and monetary policies.
The Bretton Woods system was set in place in 1944 in anticipation of the victory of the Allies in World War II and it was based on the evident economic financial facts of that period: the war about to end, the dominance of the United States and the dominance of the U.S. dollar system which was the pivotal international currency linked to gold by a fixed exchange rate with other currencies with fixed par value rates too.
What was linked to Bretton Woods was an international regulatory system for capital demand and supply and two very key institutions, the World Bank for long term capital assistance mostly to developing nations suffering from chronic capital shortages, and the International Monetary Fund, the IMF, for regulating money supplies to alleviate the crises in international payments. There was a multifunctional, global monetary banking framework established under Bretton Woods.
The special societal and economic facts on which that was posited have changed. One of course is the emergence of other banking systems not in opposition but parallel to the American system. We would take note obviously most recently of the emergence of the European banking group, the emergence of the new European currency unit and also of course of the Japanese construction of their own financial banking system.
More important, however, is the challenge to the institutions themselves. All of us have had reservations about the response of the International Monetary Fund to the Asian crisis. Others would take objection, as I have in other places, to the response to the change from the Soviet Union to a number of independent states and Russia itself.
The careful line between financial policy and political policy in the strict sense which figures largely in the IMF's decisions has sometimes led to results that one would question. Again there have been serious complaints made by third world countries.
What we are really directing attention to is that the member for Regina—Qu'Apelle's motion, the concept of curbing wild currency fluctuations due to manipulation of the international financial markets, this sort of thing has to be viewed in the larger context of the international financial regulatory framework.
I think we have to consider it together with the World Bank and the IMF. It will make a fruitful subject for study by the House committee on foreign affairs which had a very able group working on international trade policy. It is a subject that it could attend to.
More than ever the motion which we accept in its amended form asks us to effectuate this tax in concert with the international community. It is the green light. It reinforces our attempts to get this on the agenda of the G-7 and to re-examine the issue of fundamental reforms in international financial and banking institutions.
Sometimes we get interesting new policies. The post-Thatcher policies in Great Britain, which British Chancellor of the Exchequer Gordon Brown is calling for, look for some new global overarching international financial regulatory machinery. It will inevitably reform the IMF, the World Bank and the Tobin tax taken in juxtaposition.
We welcome the motion by the member for Regina—Qu'Appelle. It accords with our government policy if we take it in the larger context in terms of fundamental reform and modernization of international financial institutions.
I invite the hon. member and all members of the House to join in the committee studies of this aspect preparatory to raising it with renewed force and supporting empirical data before the G-7 and other arenas so that the efforts the finance minister has taken in previous years will have that extra strength behind them.