Political will vital to ‘right kind’ of regulation: Dr Ishrat

By Zamir Haider

ISLAMABAD: Dr Ishrat Husain, Governor State Bank of Pakistan (SBP), has said the element of political will is necessary to bring right kind of regulatory environment in developing countries.

Dr Ishrat said this at the 18th Annual General Meeting of Pakistan Society of Development Economists that concluded its deliberations here Wednesday. He was commenting on the paper by Dr Mohsin S Khan, Director, IMF Institute, who delivered the Quaid-i-Azam Memorial Lecture on ‘New issues in banking regulations’. The session was chaired by Dr Shahid Amjad Chaudhry, Deputy Chairman, Planning Commission.

The SBP governor said two major determinants of financial stability were appropriate market structure and regulatory framework. He said the State Bank was pursuing a regulatory framework, which consisted of effective monitoring and supervision by state of the monitoring framework, bringing incentive structure, intensifying and strengthening the role of market discipline, intervention arrangement in the events of contingencies etc.

Dr Mohsin S Khan, while presenting his paper, said deregulation, technology and financial innovation were transforming banking.

He warned inadequate resolution to these challenges would create wrong incentives and lead to banking fragility.

Earlier, in the morning session a forum on the ‘Economic vision of Allama Muhammad Iqbal’ was held. Dr Javed Iqbal, son of Allama Iqbal and former Chief Justice of Lahore High Court, chaired the session.

Dilating upon Iqbal’s views on economic system, Dr Javed Iqbal said Iqbal was in favour of reduction in population growth and land reforms, and he advocated the establishment of a welfare state. He said past governments had tried to implement land reforms but, unfortunately, we have not been able to implement them properly. Resultantly, feudalism is still prevalent in our country, whereas India and Bangladesh have been able to eradicate it.

Speaking on the occasion, Dr Pervez Tahir, Chief Economist, Planning Commission, Government of Pakistan, said that Iqbal had a vision of economy and society. According to Dr Tahir, Iqbal was also in favour of land reforms as a solution to poverty. Khawaja Amjad Saeed, Dean, Punjab College of Commerce, Lahore, speaking on the economic philosophy of Allama Iqbal, said: “we need to be ideologically inspired that Islam is the genesis of our creation. We must try to implement the doctrine of Allama Iqbal.

Dr Fateh M. Chaudhry of the World Bank said Allama Iqbal used poetry to convey his multi-dimensional thoughts.

The Iqbal Memorial Lecture was delivered by Mr Noryuki Suzuki, General Secretary, International Confederation of Free Trade Unions, Asian and Pacific Regional Organisation (ICFTU-APRO), Singapore, on “Globalisation is not inclusive of people, let us make it a trade union perspective”. Mr Abdul Sattar Laleka, Minister of Labour, Manpower and Overseas Pakistanis chaired the session.

Speaking on the occasion Professor Suzuki, while presenting his paper said that new modalities of participation for developing countries in the trading system were suggested a decade ago to attack the persistent trade imbalance and create essential external conditions for accelerating the rate of economic growth.

Earlier Dr Ashfaque Hasan Khan, on Mr Suzuki’s paper, said it is a stark reality that globalization has brought profound economic and social changes over the last two decades. It is a fact that almost half of the world’s poor (some 2.8 billion) live on less than $ 2 a day, and a fifth (some 1.2 billion) live on less than $ 1 a day. Barriers to developing country exports in industrialized markets continue to affect adversely to poor countries, he added.

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