Treasury Undersecretary Nathan Sheets: Global Economy Falls Short of Aspirations

“Although we are seeing a strengthening recovery in the United States, the overall performance of the global economy continues to fall short of aspirations,” said Treasury Undersecretary for International Affairs Nathan Sheets to a Brookings audience yesterday. In the event, hosted by the Global Economy and Development program and the Economic Studies program at Brookings, Undersecretary Sheets described six “pillars” that form his offices “core policy agenda for the years ahead” to support “a growing and vibrant U.S. economy.”

1. Strengthening and rebalancing global growth. Undersecretary Sheets noted the “persistent and deeper asymmetry in the international economic landscape,” and called for policymakers to “work together toward mutually beneficial growth strategies” such as boosting demand.
2. Deepening engagement with emerging-market giants, such as China, India, Mexico, and Brazil. On India, for example, the undersecretary noted that “faster growth, deeper financial markets, and greater openness to trade and foreign investment promise to raise incomes, reduce poverty, and bring many more Indians into the global middle class.”
3. Framing a resilient global financial system. “To be sustained,” he said, “growth must be built on a resilient financial foundation.” (See also Federal Reserve Governor Lael Brainard’s remarks yesterday on the Fed’s role in financial stability.)
4. Enhancing access to capital in developing countries. “Expanding access to financial services for the over 2 billion unbanked people in the world promises to open new possibilities as the financial wherewithal in these populations grows,” he said.
5. Promoting open trade and investment. Undersecretary Sheets explained that “Increased U.S. access to foreign markets, and the consequent rise in exports of our goods and services, is an important source of job creation in the United States.” He described current trade priorities, including the Trans-Pacific Partnership (TPP), the Transatlantic Trade and Investment Partnership (TTIP), the Information Technology Agreement (ITA) concerning China, and the Trade Facilitation Agreement (TFA) concerning India.
6. Enhancing U.S. leadership in the IMF. Undersecretary Sheets said that Treasury and the Obama administration “are firmly committed to securing approval for the 2010 IMF quota and governance reforms.” Citing the widespread support already in place for these policies, Sheets argued that “without these reforms, emerging economies may well look outside the IMF and the international economic system we helped design, potentially undermining the Fund’s ability to serve as a first responder for financial crises around the world, and also our national security and economic well-being.” He also called on the Senate to confirm six administration nominees as executive directors or alternate executive directors at the IMF and multilateral development banks.

Watch the video here:

Get a transcript of Undersecretary Sheets’ prepared remarks here.

Brookings expert Donald Kohn, the Robert S. Kerr Senior Fellow, moderated the discussion. The speaker was introduced by Senior Fellow Amar Bhattacharya.