3 December 2007As the curtain was raised on the United Nations Climate Change Conference in Bali, Indonesia, today, Secretary-General Ban Ki-moon urged leaders to create a global framework to promote green economics and development. Writing an Op-Ed in The Washington Post today, the Secretary-General said the Bali Conference is an opportunity for leaders to establish a road map for the future and agree on a timeline to conclude a successor agreement to the Kyoto Protocol – set to expire in 2012 – by next year so that it can enter into force in 2013.“Handled correctly, our fight against global warming could set the stage for an eco-friendly transformation of the global economy – one that spurs growth and development rather than crimps it, as many nations fear.”Like the Industrial Revolution, the technology revolution and the modern era of globalization, the Secretary-General observed that the world is on the cusp of a new age of green economics.Scientists report that human activities are driving climate change, but “largely lost in the debate is the good news,” he noted, citing examples including Brazil, which derives some 44 per cent of its energy from renewable fuels – compared to the 13 per cent global average.Although China is frequently touted as the successor to the United States in being the world’s largest greenhouse gas emitter, the Secretary-General pointed out that the country is making strides to combat key environmental issues by investing $10 billion in renewable energy this year. Premier Wen Jiabao recently pledged to slash energy consumption by 20 per cent over five years.Mr. Ban said that rather than suffer from a transition to a green economy, growth may in fact gain momentum through the creation of new jobs as investment in zero-greenhouse gas energy surges.The UN Environment Programme (UNEP) has estimated that global investment in zero-greenhouse energy will reach $1.9 trillion by 2020 – a figure the Secretary-General called “seed money for a wholesale reconfiguration of global industry.”The private sector requires ground rules and is calling for policies on climate change, including regulation, emissions caps and efficiency guidelines, he said.“The scientists have done their job,” declared Mr. Ban, who is attending the Conference’s high-level segment next week. “Now it’s up to the politicians. Bali is a test of their leadership.”Some 10,000 participants from 187 countries are expected to attend the two-week Conference.Over the weekend, the Secretary-General spoke with the leaders of India and China on the issue, while last week, he conversed with the presidents of the Russian Federation, United States and Brazil, according to a UN spokesperson.
OTTAWA — The Bank of Canada’s senior deputy governor says an explosion of global debt over the last decade is a top concern that she argues is holding back economic growth and creating vulnerabilities in the world’s financial system.The global financial system is in better shape than it was in 2007 before the financial crisis, but unknowns such as ongoing U.S.-China trade tensions could knock things off course, Carolyn Wilkins said in a speech Thursday in Vancouver.Wilkins also warned that high debt loads usually become an “amplifying factor” when it comes to an economic downturn.The U.S.-China trade war and expanding global geopolitical unrest have been key worries for the Bank of Canada, she noted.“The global development that concerns me the most, though, is rising debt,” Wilkins said in her speech at an event hosted by the University of British Columbia’s economics department and CFA Society Vancouver.“Whether you’re a homeowner or a business person, you know first hand that high leverage can leave you in a vulnerable financial position. It’s no different for economies.Related Stories:Why playing politics with housing market is a dangerous game“The world has learned this lesson the hard way on many occasions in my lifetime.”She said the combined global debt owed by governments, businesses and households now amounts to US$240 trillion, which is US$100 trillion higher than just before the financial crisis and more than three times the world’s gross domestic product.Government debt, she added, has “skyrocketed” over the past 10 years, while corporate borrowing has “exploded” and now displays some risky qualities.But some debt can be a good thing, she said.For instance, Wilkins said limited accumulation of public-sector debt can help stimulate economic growth, depending on how it’s used, and companies can borrow as a way to invest in expanding their capacity.Debt levels around the world piled higher largely because of the long stretch of extremely low borrowing rates that was necessary to help global growth build fresh momentum, she said.“The downturn would have been even deeper and more painful without these decisive policy responses,” Wilkins said.“What strikes me, though, is how much overall leverage has grown globally, even as the financial sector has repaired its books.”Canada’s high household debt, which is now more than 178 per cent of disposable income, is the central bank’s top domestic financial vulnerability, she said.“The good news for Canadian businesses and households is that the financial system — globally and here at home — is safer than it was a decade ago thanks to much stronger safeguards,” she said.Wilkins added it’s important for policy-makers around the world to continue efforts to conduct stress tests on different parts of the financial system, and, when necessary, put in safeguards.
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