In October 2011 the Vatican organisation known as the Pontifical Council for Justice and Peace on The Global Economy issued a document with proposals on how to reform the international financial and monetary system. This document, contrary to some other Church documents, does not indulge in nuances where the authors’ real intentions are purposely obscure and subject to interpretation. The concrete economic proposals made in this document are clear enough to stand the scrutiny of economic analysis.

This document stirred considerable interest in both Church and business circles- John Cassar White

The proposals are built on established teaching of the Popes over the past 40 years on the need of a “global public authority” that would go beyond national interests. The document concludes that the current economic crisis is likely to increase the inequality between rich and poor in the world. It insists that the time is right to take concrete steps towards the creation of a central authority that is motivated by moral rectitude rather than monetary gain.

The main initiatives proposed in this Vatican document is the setting up of a central world bank or a “global authority” that would regulate the flow of monetary exchanges, in a context where according to this document the International Monetary Fund has lost the ability to control the amount of credit risk taken on by the system.

The other proposals are equally categorical. The Vatican supports taxation measures on financial transactions where the proceeds of such tax revenue could be used to create a “world reserve fund” to support the economies of countries hit by the economic crisis.

It also supports the recapitalisation of banks with public funds and makes support conditional on “virtuous” behaviour aimed at developing the real economy. Another proposal is that the management of financial markets should be made more effective through tighter regulation as, according to the Vatican document, this market remains largely uncontrolled today.

As was to be expected this document stirred considerable interest in both Church and business circles with reactions varying from those expressing significant approval to others showing scepticism. Kishore Jayablan who runs the Michigan-based Catholic conservative Acton Institute which studies the relation between economics and theology took a rather sceptical view on the effectiveness of the proposals made in the Vatican document.

He says: “The Church has always taught that the problems are best solved at the lowest level so this is a strange remedy. On what basis would you think a global authority would work better than a national authority? The scope and scale of the global economy is so large that it can’t be managed. It can only be regulated at a much more local level where you would have some control.”

Father Oliver Williams, an associate professor of management at the University of Notre Dame in Terre Haute, Indiana, was more positive: “The Vatican document is meant to force readers into thinking about the world’s economic problems, especially that of extreme poverty. The goal is to be provocative and challenge people to come up with suggestions of their own.”

This document certainly achieves this aim as “it is in keeping with all of the Church’s social teaching, wishes to defend honesty, transparency, truthfulness and justice in financial dealings over and against dishonesty, opacity, false representations and injustice”.

However, it must be acknowledged that “the global economy, and especially the global derivatives market, is big, enormous….in fact, so big, so opaque, so complex, that literally no one knows what the situation really is, or what measures to take to undo the financial detonator that seems ready soon to go off”.

I believe that the time is right for the Church to once again propagate its social teaching not necessarily by proposing blueprints for economic reform, but by putting morality back on the agenda of political thinking, challenging “utilitarian thinking” based on the belief that “what is good for the individual leads to the good of the community”.

It is important that once again the Church is seen to be the “salt of the earth” especially in its role of forming the conscience of people. Moreover, religious sensibility and moral values shared by world leaders could ultimately be as powerful a tool to economic and financial reform as increased regulation and controls.

Those who are interested in learning more about this important document will do well to attend the Roundtable Conference that is being organised by the Centesimus Annus Pro Pontifice Foundation on Tuesday at 6.30 p.m. at Palazzo Depiro, Mdina.