I join the Prime Minister of Spain and the co-hosts in saying how pleased I am to welcome all of you.
How can we make the world’s financial architecture fairer? The architect Frank Gehry once said: “Architecture should speak of its time and place, but yearn for timelessness”. Indeed, Gehry was not thinking about global financial architecture, but the quote is relevant to what we are discussing today.
Our current global financial architecture is like an old house, built in another time, for another time, and this house has served us well for decades. However, we all feel that it’s time to make this house strong and sturdy again, to protect its inhabitants and to meet their needs.
I believe we should focus on three areas: development finance, debt alleviation, and climate finance.
First, we need to make sure everyone has fair access to financing. To make this happen, Multilateral Development Banks (MDBs) must reform and there must be better, faster, and more effective access to finance. This will enable us to tackle global challenges — such as climate change, biodiversity, pandemics and poverty.
More effective finance will also support the most vulnerable countries, so MDBs need to change with the times. That means aligning their financial flows and know-how more effectively to address today’s challenges, and mobilising and scaling up private finance. MDBs must be ready to assist countries in need by providing more concessional lending. The G20 Roadmap is a crucial first step — it could free up about $200 billion over the next decade.
Looking forward, we should be ready to consider increasing the capital of development banks. Equally, we need to keep in mind all the ways in which we can promote development. One example is the African Union’s push to implement the African Continental Free Trade Area. This could increase Africa’s income by $450 billion by 2035.
Second, we need to tackle the problem of debt. Too many countries are drowning in a sea of debt. Over the past five years, the debt stock of emerging market economies has ballooned from $75 trillion to $100 trillion. As President Ruto said in Paris in June: it costs eight times more for African economies to borrow than it does the rest of the world. This is simply unfair. We must lend a helping hand to countries in need by focusing on and delivering the G20 Common Framework for Debt Treatment.
Even so, this is not enough. We can do more, for instance by extending the Common Framework to middle-income countries that are currently not eligible.
Finally, our third course of action concerns climate finance. We need to increase finance from billions to trillions of dollars, drawing on all possible sources. Vulnerable economies should not have to choose between decarbonising and reducing poverty.
This year, for the first time, we will meet the $100 billion goal on climate finance. We should make this happen every year. The EU and its Member States continue to be the world’s top provider of climate finance — providing €23 billion in 2021.
Public money is key to catalysing and removing the risk from private investment. So it is our job — in the public sector — to set the right conditions for more private investment. We also need to be more creative and more willing to take risks. One example is debt for nature swaps — in countries such as Barbados or Ecuador.
Our house will not be renovated in a day. And it will require more than a nail and a hammer. But with political will and courage, I believe we can make this house stronger and sturdier than ever. This is our shared responsibility, this is our shared duty.