Human Development Report 2013 - UNDP

and internationally. Over time, as new setsof challenges have emerged, countries havecreated new forms of governance to deal withthese. In finance, for example, countries wantto diversify their exposure and their “insurancepolicies”. They seek to use a mixture of nationalreserves, bilateral credit lines, regional arrangementsand the IMF. The international regimeneeds to be pluralist while ensuring that cooperationat the regional and subregional levelsis consistent with mechanisms and policies atthe international level.The ultimate purpose of this “coherentpluralism” is to ensure that institutions at alllevels work in a coordinated fashion to provideglobal public goods. The complementarity notjust between global and regional institutions,but also across public, private and civil societyorganizations, has the potential to be constructive,even if it may appear fledgling and inadequateat present. Where new arrangementsand new partnerships arise to meet the gapsleft by old arrangements, they should be encouraged,avoiding duplication to the greatestextent possible. New arrangements at all levelsmust work in concert with each other and instep with existing multilateral organizations,aligning interests and sharing responsibilities.While pluralism and greater diversity arewelcome developments, duplication and inefficiencyoccur among the plethora of new organizations.Moving towards a coherent structure,some organizations will survive, and others willbe deemed redundant.The governance of global public goods forsustained progress in human development requireseffective multilateralism. Internationalinstitutions can also provide guidance on humanrights and other universal principles andarbitrate in such areas as public internationallaw. However, multilateralism will need to bemore flexible to deal with new challenges andgeopolitical realities. In a coherent pluralisticsystem, international institutions can serve ascoordinating bodies, playing a catalytic or conveningrole for all stakeholders. To do this, theyneed the mandate and sufficient expertise andresources to mediate and facilitate, to analyseand respond to often divergent interests andto propose workable and mutually beneficialoutcomes. To fully engage the South, manyinternational organizations need updatingand transforming. The South in turn is morelikely to use and fully support multilateral institutionsthat are seen to be acting as much inthe interests of the South as in the interests ofdeveloped countries.Financial architecture: redesignfor the rising SouthThe rise of the South is creating new patterns ofresource accumulation, potentially leading to adenser, multilayered and more heterogeneousfinancial architecture. This could promote financialstability and resilience, support long-runproductive capacities, advance human developmentand enlarge national policy space.In some cases, these emerging institutionsand arrangements could substitute for someof the functions of the Bretton Woods institutions,but in most cases, they complement theexisting global financial architecture. Moreover,emerging institutions may prove transformativeby prodding the Bretton Woods institutions torespond to concerns about representation, governanceprinciples and conditionalities.The South has already developed several alternativeinstitutions and approaches, includingregional monetary and support arrangements:• The Chiang Mai Initiative emerged in thewake of the 1997 Asian financial crisis, takingthe form of a series of swap arrangementsamong Asian countries. It evolved into theChiang Mai Initiative Multilateralization,which allows members to draw on themultilateral swap facility to address balanceof payments and short-term liquiditydifficulties.• The Arab Monetary Fund, founded in 1976by the 22 member countries of the League ofArab States, has some $2.7 billion to supportemergency financing for member countriesas well as broader monetary cooperation.There is also an aspiration for a unified Arabcurrency. 31• The Reserve Bank of India recently announceda $2 billion swap facility formembers of the South Asian Association forRegional Cooperation. 32• The Latin American Reserve Fund, with acapitalization of about $2.3 billion, offersbalance of payments support to members.It also guarantees third-party loans andThe ultimate purposeof “coherent pluralism”is to ensure thatinstitutions at all levelswork in a coordinatedfashion to provideglobal public goodsChapter 5 Governance and partnerships for a new era | 113