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7/17/2019 ECOSOC Agenda2
http://slidepdf.com/reader/full/ecosoc-agenda2 1/10
STUDY GUIDE
THE UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL
(ECOSOC)
NOTE: The following study guide has to be used to get a brief overview of
the agenda. The delegate should not rely only on this guide or quote facts
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as reference from this guide. Facts pertaining to the agenda shall only be
quoted from the UN veried sources.
ECOSOC at a Glance
The Economic and Social Council (ECOSOC) is the United Nations’ central platform
for reflection, debate, and innovative thinkin on sustainable development!
Mandate
• ECOSOC, one of the si" main orans of the United Nations established b# the
UN Charter in $%&', is the principal bod# for coordination, polic# revie, polic#dialoue and recommendations on economic, social and environmentalissues, as ell as for implementation of the internationall# areeddevelopment oals!
• ECOSOC serves as the central mechanism for the activities of the United
Nations s#stem and its specialied aencies, and supervises the subsidiar#and e"pert bodies in the economic, social and environmental fields!
• ECOSOC has underone reforms in the last decade to strenthen the Council
and its orkin methods, ivin special attention to the interated andcoordinated implementation of, and follo*up to, the outcomes of all ma+or United Nations conferences summits in the economic, social, environmentaland related fields!
Functions
ECOSOC enaes a ide variet# of stakeholders polic#makers, parliamentarians,
academics, ma+or roups, foundations, business sector representatives and -,.//0
reistered non*overnmental oraniations in a productive dialoue on sustainable
development throuh a prorammatic c#cle of meetins! The ork of the Council is
uided b# an issue*based approach, and there is an annual theme that accompanies
each prorammatic c#cle, ensurin a sustained and focused discussion amon
multiple stakeholders!
The prorammatic c#cle of ECOSOC includes
• High-Level Segment
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o High-Level Political Forum (HLPF) provides political leadership,uidance and recommendations for sustainable development, follo*upand revie proress in the implementation of sustainable developmentcommitments1
o Annual Ministerial evie! (AM)" held annuall# since .//2,assesses proress in the implementation of the United Nationsdevelopment aenda1
o #evelo$ment Coo$eration Forum (#CF)" held on a biannual basis
since .//2, revies trends and proress in development cooperationon a biannual basis!
• %ntegration Segment" held annuall# since ./$&, promotes the balancedinteration of the economic, social and environmental dimensions of sustainable development both ithin the United Nations s#stem and be#ond!
• Humanitarian A&&airs Segment" that takes place in alternate #ears in Ne3ork and 4eneva, seeks to strenthen the coordination of the United Nations’humanitarian efforts!
• O$erational Activities &or #evelo$ment Segment, held annuall#, providesoverall coordination and uidance for United Nations funds and prorammeson a s#stem*ide basis!
• Coordination and Management Meetings (CMM)" held throuhout the #ear,
revie the reports of its subsidiar# and e"pert bodies1 promote s#stem*idecoordination and revie of development issues1 and consider special countr#situation or reional issues!
• 'outh Forum" held annuall# since ./$., brins the voice of #outh into the
discussion of the 5illennium 6evelopment 4oals and post*./$7 developmentaenda!
• Partnershi$ Forum" held annuall# since .//8 and linked to the theme of the
Council’s 9nnual 5inisterial :evie, aims at findin innovative a#s tocollaborate ith the private sector and foundations in search of solutions for
the man# development challenes facin overnments toda#!
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AGENDA 2
Present situation pertaining to the currency wars
and adhering to a coprehensi!e so"ution #or the
sae$
A) Introduction
With the growing integration of the markets and increasing capital flows, competitive
devaluation is becoming increasingly important. Deliberate attempt to lower the value of
currency is often associated with inflationary policies aiming to increase local demand,
stimulate exports and decrease unemployment levels. Nevertheless, currency devaluation can
lead to increased prices of foreign goods and the costs of imported products, in turn
decreasing living standards. More important however, with increasing trading costs for other
countries and increasing costs of stable exchange rates, devaluation policies can provoke
other countries to follow the pattern initiating a very subtle line between devaluation policy
leading to increased local productivity and devaluation that provokes growing competition
which might end up in the currency war.
B) Problem History
urrency wars and currency competitions branded as competitive devaluations were thecharacteristic that originated in the !"th century. #lthough the policy of currency devaluation,
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especially coins debasement, was widespread before $%th century, it is hard to talk about the
¤cy war' as an international phenomenon during those times, since the volume of
international trade remained insignificant. With the growing integration of the capital
markets and increasing capital flows in the second half of the $% th century, monetary policies
became playing increasingly important role. Nevertheless, the adoption of gold standard
system with pegged currency value, by the ma(or economic powers between $)*"+$%$,
diminished the possibility of the currency wars. -t was only after world war one, during the
times of inter+war instability when the phenomenon of competitive devaluation really
originated. With the advent of reat Depression, countries started adopting fiat money
policies and devaluating their currencies, that led to the fall of the gold standard system.
Devaluations reached unprecedented levels, affecting the living standards and purchasing
power of citi/ens. 0e(ection of gold standard system and devaluation of currencies allowed
increased money supply, and inflationary policies. 1hose countries that left gold standard and
those still remaining were in constant competition, struggling to maintain their exchange
rates. 2owever, a believed people3s poverty provoked by currency competition is much
debated. #s 4arry 5ichengreen summari/ed:
6 In the 1930s, it is true, with one country after another depreciating its currency, no one
ended up gaining competitiveness relative to anyone else. And no country succeeded inexporting its way out of the depression, since there was no one to sell additional exports to.
ut this was not what mattered. !hat mattered was that one country after another moved to
loosen monetary policy "ecause it no longer had to worry a"out defending the exchange
rate. And this monetary stimulus, felt worldwide, was pro"a"ly the single most important
factor initiating and sustaining economic recovery.3 75ichengreen, !"$89
#nother phase of currency devaluation might be associated with the fall of 4retton+Woods
system, when the :; dollar pegged currencies started implementing floating exchange rates.
-n *"3s the competitive pressure originated between :; dollar, Deutsche Mark and ;wiss
<ranc. 1he *"3s currency competition was eased by exchange controls and 6substitution
accounts3. 7;alin, $%)9
1he period after !"") financial crisis can be associated with another currency war. :;#,
hina, =apan and 5uropean :nion witnessed increased currency devaluation, with :;# and
hina facing increased tensions over their monetary policies from !"$!.
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Fig. 1% &P'(USD Course #or the "ast )* onths with &P' "osing near"y
C) Current State and Case Study
;ince !"$!, there has been a heighted rhetorical conflict between the :;# and hina,
with several :nited ;tates congressmen denouncing hina of playing an &unfair game'
7Na/emroaya, !"$9. #nd while many economists expected currency wars to be over after
the end of the reat <inancial risis in !"$">!"$$ 75ichengreen, !"$89, the opposite
seems to be the case. 1he recent 5uropean entral 4ank3s ?$.$ trillion stimulus package
may again unleash a prolonged period of what is known as &beggar+thy+neighbour'
economic policy@ currency wars and competitive devaluation as they amount to nations
trying to gain economic advantages without considerations for the ill+effects they mayhave on other countries. &1his is a war that pits the central banks of the world3s ma(or
trading blocs against each other and, as currencies yo+yo in value, creates a nervousness
and caution among investors that can create years of stagnation' wrote #he $uardian on
=anuary !A. William White, a senior B5D official, furthermore told the %aily #elegraph@
&We3re seeing true currency wars and everybody is doing it, and - have no idea where this
is going to end.' Nouriel 0oubini, Professor at New Cork :niversity3s ;tern ;chool of
4usiness, in another
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i!" 1 @ 5:0>:;D ourse for last $! months
with a 5:0 depreciation of over 8"
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piece of #he $uardian, wrote that almost every country was currently trying to devalue
against the dollar and against each other 70oubini, !"$9.
oncretely, the 5uro has fallen close nearly !" vis+E+vis the Dollar over the past seven
months. ;ome analysts 7hen and MacDonald, !"$A9 even expect the 5uro to fall below F$
in a few months3 time G in !"$, it was still worth almost F$.".
1he 5uro/one3s latest round of Huantitative 5asing, or H5, G an unconventional form of
monetary policy where a entral 4ank creates new money electronically to buy financial
assets, such as government bonds, with the aim of directly increasing private sector spending
in the economy and returning inflation to target 7=oyce et al, !"$$9 G could be argued to (ust
be a later version, or a response, to the H5 that both the :nited ;tates3 <ederal 0eserve, as
well as the :nited Iingdom3s 4ank of 5ngland, have engaged in since the outbreak of the
reat <inancial risis and the bankruptcy of Jehman 4rothers
7=oyce et al, !"$9.
Cet it is not (ust the 5uropean entral 4ank that is heavily devaluing its currency through
monetary policy. =apan3s entral 4ank announced in November !"$ that it would
increase H5 asset purchases to F*""bn p.a.
1he devaluation of the 5uro and the Cen vis+E+vis the :; Dollar will mean that #merican
products will be more expensive in these countries. 1herefore, #merican exports are
expected to fall 70omer, !"$$9. -n turn, this means that the recovery the #mericaneconomy currently finds itself in may falter, due to the pressure of the high dollar. What
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does this implyK ongress might put pressure on President Bbama to impose tariffs on
artificially low+cost imports 70usbridger, !"$A9 G but can this be seen as a solution to
currency warsK While, as mentioned at the beginning of this section, the #merican
ongress has articulated its anger at hina due to its policy of depreciation, and this may
well spill over into disputes with =apan and 5urope. -f the hairwoman of the :; <ederal
0eserve, =anet Cellen, were to halt her planned increase in interest rates 70oubini, !"$9
in order to stop the dollar from rising, in order to reduce the damage on #merican
exportsL. # full+flown currency war could be the conseuence.
Case Study$ %&e S'iss ranc
&;wit/erland 6capitulates3 on franc as global currency wars take the next victim', writes
#mbrose 5vans+Pritchard on $A =an !"$A. 1he franc surged nearly 8" vis+Evis the 5uro in
a day, as the ;wiss National 4ank 7;N49 shocked the financial markets, scrapping the three+
year currency floor it had upheld, and freeing the exchange rate. 1his came as a response to
the H5 that was announced by the 5uropean entral 4ank, which would have overwhelmed
;wit/erland. =eremy ook, from World <irst, said that this retreat was a &total capitulation',
clearly invoking the war vocabulary. &Nobody wins when you stand in the way of a freight
train, except the train.'
1his huge appreciation of the ;wiss <ranc, as a conseuence of the currency wars involving
the 5uro/one, will hit ;wiss exporters hard, as their products become much more expensive.
#s put by #he #elegraph@
&1he traumatic day in ;wit/erland has exposed limits of central bank power. -t is a
foretaste of how difficult it is becoming for countries to resist the tidal force of
devaluation policies and currency warfare as deflationary forces sweep the world. 1he
monetary hegemons are left having to pick their poisons.'
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) Potential Country Blocs
1he 5uro/one countries, as united by the 5uro, are very unlikely to take different stances
in the eneral #ssembly meeting on competitive devaluation and currency wars. 1he
stance of non+5uro/one 5: members is not that clear. Would =apan (oin that blockK -t
appears likely, given that the =apanese entral 4ank and the 5uropean entral 4ank are
engaging in similar measures.
1he :nited ;tates and the :nited Iingdom, both of whom engaged in heavy H5 early on
in !""%, and are now looking at increasing interest rates again, seem to be on a very
similar page. anada is another likely member to (oin that block. hina is a case of its
own. While clearly engaging in competitive devaluation, the rhetoric it has taken has been
openly against it. Where will it (oinK# series of emerging economies seem to make another viable country block, as, among
others, 0aghuram 0a(an, the governor of the -ndia3s entral 4ank, have expressed their
worry that competitive devaluations and currency wars will negatively affect the export and
thus growth potential of emerging nations. 1he JDs, given that they have very few
instruments to compete in such a war of the world3s superpowers, are likely to (oin such a
block.
*) +uestions a resolution s&ould address
entrally, a resolution should address how to reduce, prevent, and>or stop competitive
devaluations around the world G which rules could be put in place and how can currency
wars be prevented considering the future prospectsK 2ow can a solution be reachedK # clear
focus should be to prevent the current currency war from escalating and turning into a global
disaster G how can we stop this, without going against the national sovereignty and the
independence of entral 4anksK
When addressing the uestion of preventing future currency wars, the committee might find
it helpful to think about the uestion of exchange rates more generally, especially how
exchange rates can actually strengthen the global economy, and not put it at the hinge of
catastrophe.
-t is important that the committee keeps in mind the mandate of the #, as well as the
limits that it has when coming up with a resolution, while evidently trying its hardest to
find a creative and solutions oriented approach to solve the current crisis. 1he committee
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can also, of course, consider the expert advice of other :N bodies, such as the -M< and
the W1B.
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