By Andrea Shalal and David Lawder
WASHINGTON (Reuters) – U.S. Treasury Secretary Janet Yellen said a rapid recovery in the United States would boost overall global growth, but more work was needed to shore up weaknesses the COVID-19 crisis exposed in the non-bank financial sector, global supply chains and the social safety net.
Yellen on Tuesday told leaders of the International Monetary Fund and the World Bank that the Biden administration had decided to “go big” with its COVID-19 response to avert the negative “scarring” impact of long-lasting unemployment, adding that she hoped the U.S. economy would return to full employment next year.
Speaking during the IMF and World Bank spring meetings, Yellen said the crisis had dealt a huge blow worldwide, and it was the responsibility of advanced economies to ensure that years of progress in reducing poverty were not reversed by the crisis.
“We are going to be careful to learn the lessons of the (global) financial crisis, which is: ‘Don’t withdraw support too quickly,'” Yellen said, “And we would encourage all those developed countries that have the capacity… to continue to support a global recovery for the sake of the growth in the entire global economy.”
Yellen said she hoped global finance officials make progress on approving a new allocation of the IMF’s emergency reserve, or Special Drawing Rights, during the meeting, and said it was critical to tackle global debt issues exacerbated by the crisis.
She also underscored the Biden Administration’s commitment to tackling climate change at home and ensuring the needed “transfer of resources” to enable similar actions in developing countries.
“We need to make sure that we help developing countries meet their climate goals along with their development objectives. And the availability of green finance is critical to that,” she said, noting that addressing climate change would also bring opportunities for investment to the private sector.
Yellen said it was critical to ensure the world was better prepared for the next global health crisis, citing the need to improve the resilience of supply chains and social safety nets around the world.
She said the core banking sector had been strengthened after the 2008-2009 financial crisis, but some areas in the non-bank financial sector “showed tremendous stress” during the pandemic and would require attention.
(Reporting by Andrea Shalal and David Lawder; Editing by Chris Reese and Dan Grebler)