Although there’s no need to formally coordinate macroeconomic policies, global trade and financial markets do need cooperate and share information, Bank of Canada Governor David Dodge said today.

Speaking to the European Economics and Financial Centre in Paris, Dodge steered clear of hints as to the central bank’s next rate action. Instead, he focused on the effects of globalization for monetary and fiscal policymakers.

“As globalization continues, it may appear that there is a need for national authorities to coordinate their macroeconomic policies through formal agreements and arrangements,” Dodge said.. However, he argued that this is not the case. Rather, he said, that the best collective outcome depends on each country following appropriate domestic macroeconomic policies.

However, he said that, when it comes to international trade and global financial markets, the best outcome will require strong, coordinated efforts. “Collectively, developed countries still have a considerable way to go in terms of reducing subsidies and liberalizing trade for a number of goods, including agricultural products. In my view, we have a responsibility to do this in order to promote growth in the most impoverished nations,” he said. “That is why Canada has been pushing for an early resumption of the Doha round. And there are other sectors, such as financial services, where major effort is required. This effort must be made so that the global economy can benefit. It won’t be easy; but, in the long run, it will be worth it.”

Dodge argued that international coordination is important in efforts to establish a framework to allow financial markets to function efficiently. “In recent years, this has been reflected in the drive towards greater transparency,” he noted. “Unless countries develop and implement a clear and coherent way of disseminating relevant information, global financial markets will be unable to function at peak efficiency.”

While domestic efforts to boost transparency will be helpful on their own, Dodge suggested that “if we coordinate our efforts, we can spread the benefits of transparency and help global financial markets to operate more efficiently.”

“We do need a coordinated international trade order, and the strengthening of that order remains a worthy goal for us all. We do need a coordinated, transparent framework to support and maintain effective and efficient global capital markets. And we do need to promote the coordination of accounting standards,” he concluded.

“The sharing of information among national governments and regulatory bodies is absolutely essential. Co-operation helps policy-makers follow sound domestic economic policies appropriate to their own circumstances while being cognizant of the actions of others. That, in turn, should lead to better global economic performance.”