Vatican panel sees costs, risks in unregulated global finance system
May 05, 2010
The Pontifical Academy of Social Sciences discussed the causes and effects of the global financial collapse during a recent meeting.
The Pontifical Academy of Social Sciences met in Rome last week. Mary Ann Glendon, the group's president, summarized the results of the session at a Vatican news conference on May 5. She observed that the timing of the conference was interesting for two reasons. First, it followed publication of Pope Benedict's social encyclical, Caritas in Veritate, and allowed the group to take the Pope's thoughts into consideration. Second, the meeting took place just as European financial markets were shaken by the debt crisis in Greece, so that the discussion "was marked by an analysis of recent events in a manner more immediate than is customary in the rhythms of academic life."
Glendon reported that the Pontifical Academy, like Pope Benedict in his encyclical, concluded that "the fragility of the economic system was partly a consequence of over-reliance on speculative financial activities separated from productive activity in the real economy."
In discussing the consequences of the financial crisis, the group paid special attention to the suffering of the poor. "If one compares the relative cost of the financial bailouts to the amounts needed for basic nutrition, for example, one cannot avoid the conclusion that this crisis has distracted greatly from urgent questions of development," said Glendon.
The Pontifical Academy followed up on Pope Benedict's recommendation for stronger regulation of international financial markets, and considered policies that might "ensure greater transparency in financial instruments and avoid the moral hazard problems arising from bailouts."