- The Washington Times - Sunday, September 23, 2001

With one of the world's main financial symbols reduced to a grave of rubble, many financial policy-makers around the world are trying to prevent a human tragedy from morphing into an economic one. All the same, it appears more than likely that the Group of Seven (G-7) meeting of central bankers and finance ministers, which was originally going to be held in Washington on Sept. 28 alongside the semi-annual meetings of the International Monetary Fund (IMF) and World Bank, will be postponed.

In the wake of the terrorist attacks on the World Trade Center and Pentagon, Washington would certainly be hard-pressed to handle the security challenges that massive protests would present. All the same, it is important, at this critical economic juncture, for financial policy-makers to meet, not only to prevent terrorism from fomenting instability and disruption, but also to address pressing pragmatic issues. If Washington is seen as too good a target for attack given the security challenges that massive protests could present, then another location could be chosen. It would be nice to be able to confidently declare that D.C. police are up to the task, but that simply doesn't seem to be the case.

Even before the Sept. 11 attacks, world leaders had already begun thinking creatively about where to locate summits that might attract protesters. Kananaskis, Canada, for example, has been floated as an attractive locale for a Group of Eight meeting this June or July. This mountainous city would have lodging capacity only for those attending the summit. Planning along similar lines for the G-7 meeting could increase its prospects for success.

But is the security, the expense and the risk worth it? Can't the bureaucrats teleconference? These are valid questions. But G-7 central bankers and finance ministers should meet in person, with the immediacy, flexibility, spontaneity and intimacy that an in-the-flesh meeting can provide. Certainly, these policy-makers will want to present their arguments in person. Also, for the health of the global economy, private sector businessmen must at some point be willing to travel. If policy-makers send the message that they themselves are hunkering down and staying home, then markets around the world will suffer.

What will these policy-makers need to discuss? Finance ministers should want to share notes regarding how to alter fiscal goals for this year, and possibly beyond. The changing economic scenario requires that policy-makers worry more about fiscal stimuli than deficits or surpluses. But apart from refashioning fiscal goals, on which there is likely broad consensus, policy-makers will want to exchange ideas on how to best structure stimuli to cover both social and financial concerns. Also, in this globalized economy, America's economic health will have a profound impact on Europe, and vice versa. So, central bankers will want to compare economic projections in order to best tailor monetary policy. And finally, personal contact may be comforting to policy-makers that may well be feeling overwhelmed with challenges, given the precarious state of the global economy.

Given the degree of destruction on Sept. 11, it is natural that investors and consumers are a little shaken up. To shore up confidence in international markets, central bankers and finance ministers should meet, strategize and commiserate.

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