United Nations


General Assembly

Distr. GENERAL  

21 February 1997


Fifty-first session
Agenda item 94 (b)


              [on the report of the Second Committee (A/51/602)]

            51/166.     Global financial integration and
                        strengthening collaboration between
                        the United Nations and the Bretton
                        Woods institutions

      The General Assembly,

      Reaffirming its resolution 50/91 of 20 December 1995, entitled
"Global financial integration:  challenges and opportunities", and
Economic and Social Council resolution 1996/43 of 26 July 1996 on
strengthening collaboration between the United Nations development
system and the Bretton Woods institutions,

      Expressing concern that a number of developing countries have
become more vulnerable, in the course of liberalizing their external
economic and financial regimes, to the volatile fluctuations of
private capital flows in international financial markets, and
stressing the importance at the national level in the countries
concerned of a favourable climate for private financial flows, sound
macroeconomic policies and appropriate functioning of markets,

      Welcoming the initiative the Bretton Woods institutions have
taken to address the question of the volatility of capital flows,

      Recalling its resolution 50/227 of 24 May 1996, annex I, section
VIII, on the relationship between the United Nations and the
international finance and trade institutions, as well as other
relevant resolutions,

      1.    Recognizes that technological advances have reduced the
costs and increased the speed of international financial transactions
and that, as policy liberalization has facilitated international
capital flows, financial institutions have increasingly added foreign
assets to their portfolios, paving the way towards the phenomenon of
global financial integration;

      2.    Stresses that global financial integration presents new
challenges and opportunities for the international community and that
it should constitute a very important element of the dialogue between
the United Nations system and the Bretton Woods institutions;

      3.    Notes that the globalization of financial markets can
generate new risks of instability, including interest rate and
exchange rate fluctuations and volatile short-term capital flows,
which require all countries to pursue sound economic policies and to
recognize the external economic impact of their domestic policies;

      4.    Stresses that sound domestic macroeconomic policies of each
country in regard to promoting macroeconomic stability and growth are
primary elements for determining private capital flows, and that the
coordination of macroeconomic policies, where appropriate, and a
favourable international economic environment play an important role
in reinforcing their effectiveness;

      5.    Also stresses that implementation of sound domestic
monetary, fiscal and structural policies over the medium term,
including ensuring sound banking systems, is required to promote
financial and exchange rate stability;

      6.    Further stresses that Governments and international
financial institutions have a contribution to make to reducing the
risks of volatility of short-term capital flows and to promoting
stability in domestic financial markets, within their respective

      7.    Recognizes the progress made in improving risk management
and transparency in international financial markets, such as the
International Monetary Fund's improved surveillance capacities,
standards for the provision of economic and financial information to
markets and the creation of an emergency financing mechanism;

      8.    Also recognizes the progress made in establishing the new
arrangements to borrow, which would effectively double the resources
currently available to the International Monetary Fund under the
General Arrangements to Borrow and improve the Fund's ability to
assist members in circumstances that could have systemic implications;

      9.    Recalls that, in the context of global financial
integration, further efforts have to be made, at both the national and
international levels, to strengthen international economic

      10.   Recognizes that a number of developing countries have been
able to take advantage of the globalization of finance, and notes the
need for the expansion of private capital flows and for broader access
by all developing countries to those flows, and therefore the need for
the international community to assist low-income countries, especially
those in Africa, in their efforts to create the enabling environment
necessary to attract such flows;

      11.   Notes that a number of developing countries, among them most
of the least developed countries, especially those of Africa, have not
benefited from the globalization of finance and continue to be in
great need of official development assistance;

      12.   Recognizes, in this context, that the regular lending
programmes of the multilateral institutions, recent initiatives aiming
at enhancing the confidence of the financial markets, and the
operational activities of the United Nations system, inter alia, in
promoting capacity-building for sound financial management, contribute
to assisting recipient countries, particularly developing countries,
in such adjustment and stabilization efforts as are conducive to their
development process;

      13.   Welcomes Economic and Social Council resolution 1996/43 on
strengthening collaboration between the United Nations development
system and the Bretton Woods institutions, and calls for its full

      14.   Notes that cooperation between the United Nations and the
Bretton Woods institutions continues to be strengthened at the level
of operational activities for development;

      15.   Considers that the strengthening of collaboration between
the United Nations and the Bretton Woods institutions requires an
integrated approach, encompassing a closer policy dialogue at the
intergovernmental level on relevant areas of international development
policy issues, taking into account their respective competences;

      16.   Stresses the need for encouragement of private flows to all
countries, in particular to developing countries, while reducing the
risks of volatility;

      17.   Emphasizes the need to explore ways to broaden appropriate
enhanced cooperation and, where appropriate, coordination of
macroeconomic policy among interested countries, monetary and
financial authorities and institutions, so as to enhance preventive
consultation arrangements between such institutions as a means of
promoting a stable international financial environment conducive to
economic growth, particularly of developing countries, taking into
account the needs of developing countries as well as situations that
may have a significant impact upon the international financial system;

      18.   Reiterates the need for broadening and strengthening the
participation of developing countries in the international economic
decision-making process;

      19.   Welcomes the steps taken by the International Monetary Fund,
and recognizes the need for a stronger and central role for the Fund
in surveillance of all countries, in a symmetrical manner;

      20.   Reaffirms the objective of promoting greater transparency
and openness, including increasing participation of developing
countries in the work of the International Monetary Fund, this
objective also involving, among other elements, the regular and timely
provision of economic and financial data by all Fund members;

      21.   Welcomes the decision of the Economic and Social Council
that the theme of its high-level segment in 1997 will be:  "Fostering
an enabling environment for development - financial flows, including
capital flows; investment; trade";

      22.   Requests the Secretary-General to report to the General
Assembly, at its fifty-second session, in cooperation with the Bretton
Woods institutions and the United Nations Conference on Trade and
Development, on the implementation of the present resolution.

                                                          86th plenary meeting
                                                              16 December 1996

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