I am in Paris at the moment, attending a conference on innovative finance in development,
put together by the World Bank, AFD (the French development agency),
and the Gates Foundation. It is an interesting event. As well as panels
and workshops, there is a competition for promising financial innovations. The World Bank has a very good pamphlet, Innovative Finance for Development Solutions, if you want some background reading.
The
competition’s 20 finalists include all manner of ingenious schemes
designed by small NGOs, not-so-small development agencies, and
everything in between. “Mobile Authentication for Indo-Nepal
Remittance” (by Ekgaon Technologies and Nirdhan Utthan Bank), for
instance; “Natural Catastrophe Protection for the Rural Poor”
(Caribbean Risk Managers and Development Bank of Jamaica); “Proving the
Value of Mobile Money for Microfinance” (by the Grameen Foundation);
and so on.
I moderated a panel on the first morning. (I expect there will be
video later. I’ll put the link in this post when I have it.) The issue
that interested me most was the tension between all this pro-poor,
pro-development financial ingenuity and the now-prevailing orthodoxy
that financial innovation is essentially a scam perpetrated by Wall
Street and its offshoots on everybody else. In the US context even Paul
Volcker, as respected and mainstream an eminence as one could wish,
says he sees little evidence that financial innovation has brought
social gain.
The Economist just hosted an interesting debate on this between Joe Stiglitz and Ross Levine.
Nearly 60% of readers casting votes agreed with Stiglitz in opposing
the motion, “This house believes that financial innovation boosts
economic growth.” I’m with the minority in thinking that Levine made
the better case. As I mentioned the other day, Bob Litan
has done a good even-handed essay about the pros and cons of specific
financial innovations, instrument by instrument. Bob Shiller as always
is a font of wisdom on this subject: in The Subprime Solution and The New Financial Order he makes a persuasive case that we need new kinds of financial innovation-but in any event, more of it not less.
Pressed
for time, my panel did little more than raise the subject and
acknowledge the dangers. Browse through some of the schemes discussed
in the Bank’s pamphlet, or the competition finalists on the conference
website, and see if your suspicion of financial innovation is not
tempered a little.
This was the first time I’d been to Paris for
several years, so indulge me in some cultural observations. The city
seems to have been invaded by very large scooters-scooters which are to
ordinary scooters as Hummers are to ordinary SUVs. They are more akin
to small cars. In fact, some have two wheels at the front so that they
can stand unsupported. I like them. They are somewhat manly. I want one
of these hefty three-wheelers for driving round Washington.
Happily
some things never change. I will say this for the French. This is a
country that dares to soft-boil an egg. My breakfast this morning was
the best I have had since I last visited Paris. Grapefruit, eggs, pain
chocolat (half), and café au lait. Simple things, slightly reminiscent
of the equivalent US and UK products, but raised to the highest
standard of deliciousness. I could move to Paris for the breakfasts
alone.
On a terminological note, I see that in France one is not a moderator but an animateur. Tout à fait.
