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General Assembly: External Sovereign debt crisis

Country: Hungary

-Model United Nations: Position Paper (Bridges Academy)

Date: 7-27-12 Max Takowsky

General Assembly: External Sovereign Debt

The external sovereign debt crisis is of critical importance, compromising the economic stability of all the members of the European Union and world economies. Seven leading factors contributed to this problem: the globalization of finance, high-risk borrowing and spending, the dramatic decline of real estate, the current global recession, banking bailouts, and questionable governmental choices based on revenues and expenses. Considering the globalization of finance, the decline of individual economies has both national and international impact. Given the economic interdependence of nations, the average debt of developing countries increased by 200% from 2009 through 2012. Since its inception, the UN has recognized that economic development is essential for the growth in human rights and dignity. The millennium declaration seeks a growing and thriving international governmental system that cultivates stability and prosperity. Since the adoption of these goals, the United Nations has encouraged the development of policies and practices that forge functional economic systems. Hungary has recently endorsed a fiscally conservative approach and is actively addressing the current sovereign debt crisis with other similarly sized nations. In early 2012, the UN consul hosted a meeting in Hungary with 27 member states to discuss ways to alleviate debt while also preventing further default. Hungary plans to sell 300 million euros worth of government issued bonds over the next three years at a rate of 2.5% above that of inflation. To stimulate demand for these bonds, Hungary supports the UNs proposal to grant European citizenship to investors willing to spend 250,000 euros. Hungary looks forward to working with member nations to resolve the crisis regarding sovereign debt and makes the following four recommendations: -That the UN constructs a financial advisor commission, in order to develop global economic benchmarks of the current economic health. -That member nations develop internal financial policies to achieve the global benchmarks. -That the financial advisory commission develop effective mechanisms for evaluation and communicating individual nations progress towards those benchmarks. -And that the financial advisory commission issue warnings on a quarterly basis and provide specific recommendations to countries that fail to meet the benchmarks. The magnitude and complexity of the current crisis is unparalleled. Solving this crisis will require equally unparalleled amounts of international cooperation.

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