Sanctaria wrote:We have both accepted that nothing has a 100% success rate, excellent. So, with that logic, you're accepting that at some point a mistake will be made. My concern is that mistake could be economically disastrous and the integrity and reputation of the World Assembly would be damaged. And even in the event that it's not a total catastrophe, the World Assembly would, at the very least, have its credibility damaged.
We disagree that the likelihood of this happening is anywhere near high enough to warrant never setting up the Development Fund. All financial institutions face difficulties during economic crises. The fact is, however, that economic crises are less destructive because of these institutions. It is cowardice to quiver at the thought that the World Assembly might be taking some indirect financial risk or credibility risk. The benefits of maintaining a lender of last result of developing states far outweigh any probable costs.
Furthermore, the World Assembly is not a business. It is an intergovernmental organization. The money used by this Development Foundation would be backed by the full faith and credit of sovereign states. The World Assembly isn't the originator of the loans. The foundation would be the loan servicer, so there is actually no real costs associated with the loan part of this program. The entirety of the risks for the World Assembly itself is the insurance fund.
But in thinking that there's a huge risk in establishing an insurance fund ignores the purpose of insurance in the first place! There are corporations that insure against death, which is a 100% certainty. How do these insurance funds afford to always pay out claims? It's simple: the premiums they charge cover cover their inherent liabilities plus a risk interval. Similarly, the premiums paid by those states taking out insurance would be high enough to cover all claims, plus the costs associated with riskier investments. And if an investment is simply too risky, the foundation wouldn't insure it. So the sky is not preemptively falling, the Sanctarian delegation is just overly risk-averse.
- Dr. B. castro