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Malpass: Global finance system contributes to the inequality problem

December 07, 2021 - Tuesday 11:12 AM by Donnis Abarido

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World Bank President David Malpass told a roundtable held by Chinese Premier Li Keqiang on Monday, Dec.6, that the number of people living in severe poverty has climbed by more than 100M since the pandemic began, despite global expenditure reaching an all-time high.

According to Malpass, advanced economies have recovered, but the poorest countries have had just a minimal recovery. He also added that this was generating "tragic reversals" in median wages, women's empowerment, and nutrition, while inflation, supply chain bottlenecks, and high energy costs worsened these trends.

Since the beginning of the COVID-19 pandemic, Malpass said that fiscal and monetary policy has been operating in "uncharted terrain," perhaps leading to a rapid rise in global inequality and poverty.

"Part of the inequality problem is global finance itself and the unequal structure of the stimulus," he said, noting that prevailing sovereign debt, fiscal, and monetary policies were adding to inequality.

According to Malpass, monetary policy in industrialized countries has historically concentrated on reserve requirement ratios and controlled increases in bank reserves to promote currency and price stability, a method China continues to follow.