POSITION PAPER

The General Assembly Committee: ECOFIN

Topic:Reviewing global Bank Policies To Avert
Recessions.
Country:Commonwealth of Australia
Name Of Delegate:Osama Hassan
Instutute:NEDUET
In todays modern world the world economy is very much interconnected.
There are ups and downs in the economy but recession is the period of
general decline of the economy which is visible in the decrease of GDP of a
country along with the decline in employment rate ,exports ,imports and the
industrial production. If we look at the causes of recession, we conclude that
inflation is the major reason behind this, while the high rates of interest and
the decreasing confidence of consumer also adds up to the recession.
In 1985 in United states a new home was supposed to be worth of
$78,000 ,and the median income was about $18000. If we compare it with
2011, when a new home was priced about $139,000,and the average income
was $50,237.This vast difference is because of inflation, which means an
increase in the price of services ,food, fuel, goods, property etc over a
period of time. With the increase in inflation, although the prices of goods or
the service rises, but the amount of money which an individual is earning
does not increase. Ultimately the purchasing power deflates. Beside inflation,

the high rates of interest verges the lucidity or sum of money to invest, while
the loss of consumers confidence results in the stock market crash which
leads to recession.
Australia is the only country who has a 100 quarter without a recession with
25 years growth steak, which is second longest in the history of world. This
remarkable achievement of Australia is because of excellence, how it avert
the 2008 global financial crises. Australia learned the right decisions from the
recession between 1945 and 2008. By October 2016 the unemployment rate
in Australia was found to be 5.65 while the GDP per capita was $56,327. This
is because of the rapid decision of Australian Government on impetus
measures which helped the economy to keep ticking. Contrary to that of
United State where banks became watchful of one anothers solvency and
stopped lending money to each other, Kevin Rudds Government and
Treasurer Wayne Swan committed Australia to become sponsor for any loans
made to Australian banks from international lenders. Beside this, Australia
gave away money .In total,AUd42Bn was handed out to the families in the
form of AUD 900($670) cheques to those families whose earning was less
than the AUD 10,000($74,430) per year, and AUD950($710) to the families
with school going children. This proved to be good strategy as the families
pumping the sum of money back to the economy. It was one of the lessons
learned from the last recession that not only the Australia but the whole
globe had.
Australia wants the global banks to amend their financial structures which
may alter incentives to analytical human behavior, which can further
generate the excessive credit growth and distort the prices, and ultimately
resulting in an overstretched balance sheet.
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