ecosoc agenda2

7/17/2019 ECOSOC Agenda2

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STUDY GUIDE

THE UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL

(ECOSOC)

NOTE: The following study guide has to be used to get a brief overview of

the agenda. The delegate should not rely only on this guide or quote facts

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as reference from this guide. Facts pertaining to the agenda shall only be

quoted from the UN veried sources.

ECOSOC at a Glance

The Economic and Social Council (ECOSOC) is the United Nations’ central platform

for reflection, debate, and innovative thinkin on sustainable development!

Mandate

• ECOSOC, one of the si" main orans of the United Nations established b# the

UN Charter in $%&', is the principal bod# for coordination, polic# revie, polic#dialoue and recommendations on economic, social and environmentalissues, as ell as for implementation of the internationall# areeddevelopment oals!

• ECOSOC serves as the central mechanism for the activities of the United

Nations s#stem and its specialied aencies, and supervises the subsidiar#and e"pert bodies in the economic, social and environmental fields!

• ECOSOC has underone reforms in the last decade to strenthen the Council

and its orkin methods, ivin special attention to the interated andcoordinated implementation of, and follo*up to, the outcomes of all ma+or United Nations conferences summits in the economic, social, environmentaland related fields!

Functions

ECOSOC enaes a ide variet# of stakeholders polic#makers, parliamentarians,

academics, ma+or roups, foundations, business sector representatives and -,.//0

reistered non*overnmental oraniations in a productive dialoue on sustainable

development throuh a prorammatic c#cle of meetins! The ork of the Council is

uided b# an issue*based approach, and there is an annual theme that accompanies

each prorammatic c#cle, ensurin a sustained and focused discussion amon

multiple stakeholders!

The prorammatic c#cle of ECOSOC includes

• High-Level Segment

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o High-Level Political Forum (HLPF) provides political leadership,uidance and recommendations for sustainable development, follo*upand revie proress in the implementation of sustainable developmentcommitments1

o Annual Ministerial evie! (AM)" held annuall# since .//2,assesses proress in the implementation of the United Nationsdevelopment aenda1

o #evelo$ment Coo$eration Forum (#CF)" held on a biannual basis

since .//2, revies trends and proress in development cooperationon a biannual basis!

• %ntegration Segment" held annuall# since ./$&, promotes the balancedinteration of the economic, social and environmental dimensions of sustainable development both ithin the United Nations s#stem and be#ond!

• Humanitarian A&&airs Segment" that takes place in alternate #ears in Ne3ork and 4eneva, seeks to strenthen the coordination of the United Nations’humanitarian efforts!

• O$erational Activities &or #evelo$ment Segment, held annuall#, providesoverall coordination and uidance for United Nations funds and prorammeson a s#stem*ide basis!

• Coordination and Management Meetings (CMM)" held throuhout the #ear,

revie the reports of its subsidiar# and e"pert bodies1 promote s#stem*idecoordination and revie of development issues1 and consider special countr#situation or reional issues!

• 'outh Forum" held annuall# since ./$., brins the voice of #outh into the

discussion of the 5illennium 6evelopment 4oals and post*./$7 developmentaenda!

• Partnershi$ Forum" held annuall# since .//8 and linked to the theme of the

Council’s 9nnual 5inisterial :evie, aims at findin innovative a#s tocollaborate ith the private sector and foundations in search of solutions for

the man# development challenes facin overnments toda#!

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http://www.un.org/en/ecosoc/newfunct/cmm.shtml





AGENDA 2

Present situation pertaining to the currency wars

and adhering to a coprehensi!e so"ution #or the

sae$

A) Introduction

With the growing integration of the markets and increasing capital flows, competitive

devaluation is becoming increasingly important. Deliberate attempt to lower the value of

currency is often associated with inflationary policies aiming to increase local demand,

stimulate exports and decrease unemployment levels. Nevertheless, currency devaluation can

lead to increased prices of foreign goods and the costs of imported products, in turn

decreasing living standards. More important however, with increasing trading costs for other

countries and increasing costs of stable exchange rates, devaluation policies can provoke

other countries to follow the pattern initiating a very subtle line between devaluation policy

leading to increased local productivity and devaluation that provokes growing competition

which might end up in the currency war.

B) Problem History

urrency wars and currency competitions branded as competitive devaluations were thecharacteristic that originated in the !"th century. #lthough the policy of currency devaluation,

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especially coins debasement, was widespread before $%th century, it is hard to talk about the

&currency war' as an international phenomenon during those times, since the volume of

international trade remained insignificant. With the growing integration of the capital

markets and increasing capital flows in the second half of the $% th century, monetary policies

became playing increasingly important role. Nevertheless, the adoption of gold standard

system with pegged currency value, by the ma(or economic powers between $)*"+$%$,

diminished the possibility of the currency wars. -t was only after world war one, during the

times of inter+war instability when the phenomenon of competitive devaluation really

originated. With the advent of reat Depression, countries started adopting fiat money

policies and devaluating their currencies, that led to the fall of the gold standard system.

Devaluations reached unprecedented levels, affecting the living standards and purchasing

power of citi/ens. 0e(ection of gold standard system and devaluation of currencies allowed

increased money supply, and inflationary policies. 1hose countries that left gold standard and

those still remaining were in constant competition, struggling to maintain their exchange

rates. 2owever, a believed people3s poverty provoked by currency competition is much

debated. #s 4arry 5ichengreen summari/ed:

6 In the 1930s, it is true, with one country after another depreciating its currency, no one

ended up gaining competitiveness relative to anyone else. And no country succeeded inexporting its way out of the depression, since there was no one to sell additional exports to.

ut this was not what mattered. !hat mattered was that one country after another moved to

loosen monetary policy "ecause it no longer had to worry a"out defending the exchange

rate. And this monetary stimulus, felt worldwide, was pro"a"ly the single most important

factor initiating and sustaining economic recovery.3 75ichengreen, !"$89

#nother phase of currency devaluation might be associated with the fall of 4retton+Woods

system, when the :; dollar pegged currencies started implementing floating exchange rates.

-n *"3s the competitive pressure originated between :; dollar, Deutsche Mark and ;wiss

<ranc. 1he *"3s currency competition was eased by exchange controls and 6substitution

accounts3. 7;alin, $%)9

1he period after !"") financial crisis can be associated with another currency war. :;#,

hina, =apan and 5uropean :nion witnessed increased currency devaluation, with :;# and

hina facing increased tensions over their monetary policies from !"$!.

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Fig. 1% &P'(USD Course #or the "ast )* onths with &P' "osing near"y

C) Current State and Case Study

;ince !"$!, there has been a heighted rhetorical conflict between the :;# and hina,

with several :nited ;tates congressmen denouncing hina of playing an &unfair game'

7Na/emroaya, !"$9. #nd while many economists expected currency wars to be over after

the end of the reat <inancial risis in !"$">!"$$ 75ichengreen, !"$89, the opposite

seems to be the case. 1he recent 5uropean entral 4ank3s ?$.$ trillion stimulus package

may again unleash a prolonged period of what is known as &beggar+thy+neighbour'

economic policy@ currency wars and competitive devaluation as they amount to nations

trying to gain economic advantages without considerations for the ill+effects they mayhave on other countries. &1his is a war that pits the central banks of the world3s ma(or

trading blocs against each other and, as currencies yo+yo in value, creates a nervousness

and caution among investors that can create years of stagnation' wrote #he $uardian on

=anuary !A. William White, a senior B5D official, furthermore told the %aily #elegraph@

&We3re seeing true currency wars and everybody is doing it, and - have no idea where this

is going to end.' Nouriel 0oubini, Professor at New Cork :niversity3s ;tern ;chool of

4usiness, in another

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i!" 1 @ 5:0>:;D ourse for last $! months

with a 5:0 depreciation of over 8"



piece of #he $uardian, wrote that almost every country was currently trying to devalue

against the dollar and against each other 70oubini, !"$9.

oncretely, the 5uro has fallen close nearly !" vis+E+vis the Dollar over the past seven

months. ;ome analysts 7hen and MacDonald, !"$A9 even expect the 5uro to fall below F$

in a few months3 time G in !"$, it was still worth almost F$.".

1he 5uro/one3s latest round of Huantitative 5asing, or H5, G an unconventional form of

monetary policy where a entral 4ank creates new money electronically to buy financial

assets, such as government bonds, with the aim of directly increasing private sector spending

in the economy and returning inflation to target 7=oyce et al, !"$$9 G could be argued to (ust

be a later version, or a response, to the H5 that both the :nited ;tates3 <ederal 0eserve, as

well as the :nited Iingdom3s 4ank of 5ngland, have engaged in since the outbreak of the

reat <inancial risis and the bankruptcy of Jehman 4rothers

7=oyce et al, !"$9.

Cet it is not (ust the 5uropean entral 4ank that is heavily devaluing its currency through

monetary policy. =apan3s entral 4ank announced in November !"$ that it would

increase H5 asset purchases to F*""bn p.a.

1he devaluation of the 5uro and the Cen vis+E+vis the :; Dollar will mean that #merican

products will be more expensive in these countries. 1herefore, #merican exports are

expected to fall 70omer, !"$$9. -n turn, this means that the recovery the #mericaneconomy currently finds itself in may falter, due to the pressure of the high dollar. What

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does this implyK ongress might put pressure on President Bbama to impose tariffs on

artificially low+cost imports 70usbridger, !"$A9 G but can this be seen as a solution to

currency warsK While, as mentioned at the beginning of this section, the #merican

ongress has articulated its anger at hina due to its policy of depreciation, and this may

well spill over into disputes with =apan and 5urope. -f the hairwoman of the :; <ederal

0eserve, =anet Cellen, were to halt her planned increase in interest rates 70oubini, !"$9

in order to stop the dollar from rising, in order to reduce the damage on #merican

exportsL. # full+flown currency war could be the conseuence.

Case Study$ %&e S'iss ranc

&;wit/erland 6capitulates3 on franc as global currency wars take the next victim', writes

#mbrose 5vans+Pritchard on $A =an !"$A. 1he franc surged nearly 8" vis+Evis the 5uro in

a day, as the ;wiss National 4ank 7;N49 shocked the financial markets, scrapping the three+

year currency floor it had upheld, and freeing the exchange rate. 1his came as a response to

the H5 that was announced by the 5uropean entral 4ank, which would have overwhelmed

;wit/erland. =eremy ook, from World <irst, said that this retreat was a &total capitulation',

clearly invoking the war vocabulary. &Nobody wins when you stand in the way of a freight

train, except the train.'

1his huge appreciation of the ;wiss <ranc, as a conseuence of the currency wars involving

the 5uro/one, will hit ;wiss exporters hard, as their products become much more expensive.

#s put by #he #elegraph@

&1he traumatic day in ;wit/erland has exposed limits of central bank power. -t is a

foretaste of how difficult it is becoming for countries to resist the tidal force of

devaluation policies and currency warfare as deflationary forces sweep the world. 1he

monetary hegemons are left having to pick their poisons.'

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) Potential Country Blocs

1he 5uro/one countries, as united by the 5uro, are very unlikely to take different stances

in the eneral #ssembly meeting on competitive devaluation and currency wars. 1he

stance of non+5uro/one 5: members is not that clear. Would =apan (oin that blockK -t

appears likely, given that the =apanese entral 4ank and the 5uropean entral 4ank are

engaging in similar measures.

1he :nited ;tates and the :nited Iingdom, both of whom engaged in heavy H5 early on

in !""%, and are now looking at increasing interest rates again, seem to be on a very

similar page. anada is another likely member to (oin that block. hina is a case of its

own. While clearly engaging in competitive devaluation, the rhetoric it has taken has been

openly against it. Where will it (oinK# series of emerging economies seem to make another viable country block, as, among

others, 0aghuram 0a(an, the governor of the -ndia3s entral 4ank, have expressed their

worry that competitive devaluations and currency wars will negatively affect the export and

thus growth potential of emerging nations. 1he JDs, given that they have very few

instruments to compete in such a war of the world3s superpowers, are likely to (oin such a

block.

*) +uestions a resolution s&ould address

entrally, a resolution should address how to reduce, prevent, and>or stop competitive

devaluations around the world G which rules could be put in place and how can currency

wars be prevented considering the future prospectsK 2ow can a solution be reachedK # clear

focus should be to prevent the current currency war from escalating and turning into a global

disaster G how can we stop this, without going against the national sovereignty and the

independence of entral 4anksK

When addressing the uestion of preventing future currency wars, the committee might find

it helpful to think about the uestion of exchange rates more generally, especially how

exchange rates can actually strengthen the global economy, and not put it at the hinge of

catastrophe.

-t is important that the committee keeps in mind the mandate of the #, as well as the

limits that it has when coming up with a resolution, while evidently trying its hardest to

find a creative and solutions oriented approach to solve the current crisis. 1he committee

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can also, of course, consider the expert advice of other :N bodies, such as the -M< and

the W1B.

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ecosoc agenda2

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