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Soros challenges G7
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January 29, 1999: 1:32 p.m. ET
Billionaire demands financial authorities back up promises for Brazil
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DAVOS, Switzerland (CNNfn) - Billionaire financier and philanthropist George Soros laid down the gauntlet to international financial authorities Friday, defying them to stick to their promises and prevent the growing economic crisis in Brazil from deepening.
Soros spoke to a standing-room only auditorium, packed with global business and government leaders, at the World Economic Forum.
"I challenge the G7 to deliver on the promises in its communiques," said Soros, urging the heavyweight industrial nations to make Brazil a test case of their commitment to stabilizing the global economy.
"Something really is broken in the international financial architecture," complained Soros. "We're now in the 20th month of financial crisis. Yet this crisis was brewing, it was the most anticipated crisis in recent history."
Soros urged world leaders to find new solutions to economic difficulties in emerging markets around the world, hinting that a further global shakeout is not far off. He was adamant the Brazilian crisis would plunge neighboring Argentina into recession, and confessed he found the bungled attempts to prevent Brazil's economic difficulties "mind boggling."
Soros agreed with comments by Guilermo Ortiz Martinez, governor of the Central Bank of Mexico, who warned the momentum had gone out of international attempts to protect the world financial system since the series of governmental meetings to address the problems last fall. "Then everyone was scared to hell," said Ortiz Martinez. "Now we need a new sense of urgency and leadership."
Soros was critical of those who wish to impose fixed exchange rates in an attempt to halt a run on emerging markets. "Setting up a target only gives people something to shoot at," he said, in a reference to the day he made $1 billion by breaking the Bank of England's fixed exchange rate policy.
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