Interview: Confidence, credibility essential for global financial stability -- expert

Recovering confidence and credibility will be essential for global economic and financial stability, according to a Mexican expert.

Abraham Vergara Contreras, a professor with the Ibero-American University, spoke with Xinhua on Saturday about the continuing world economic crisis aggravated by a glut of oil and historically low crude prices.

For eight years, the world "continues to be submerged" in the 2008 economic crisis due to a lack of trust in the system, Vergara said.

"The big challenge is precisely confidence, and I am talking about the whole world," said Vergara. "No one believes in what the international organizations or leaders are doing."

He predicted that world leaders attending the upcoming G20 Summit, to be hosted by east China's Hangzhou City in September, will decide to put the problem on the agenda, along with terrorism, oil prices and the financial crisis.

Given the current climate, certain companies have decided to invest half of what they would otherwise have invested, said Vergara, adding that "in the end, these (decisions) place limits on a globalized economy."

"I think the serious problem has not been one of liquidity, but of credibility," he added.

The G20 meeting needs to promote "a global infrastructure initiative to facilitate investment and spur the financing of infrastructure projects, particularly in the area of small and medium-size companies," said the expert.

While the global agenda is almost always set by the world's leading economy, or the United States, and countries such as Mexico have to adhere to its initiatives and then figure out how to benefit from them, he said.

However, things have changed as China is going to host a G20 summit and progress is being made in seeing how global growth can be accelerated, Vergara said.

The G20 Hangzhou Summit is slated for Sept. 4-5 with a theme of "Towards an Innovative, Invigorated, Interconnected and Inclusive World Economy." Endi