\'Financial diplomacy\' new channel for global deals

An intense brand of \"financial diplomacy\" has taken root in global politics as economic crises worsen, with the United States a key player, the US Treasury\'s hard-nosed global envoy said Monday. Lael Brainard, US Treasury under secretary for international affairs, said a parallel world to the traditional political diplomacy has developed with equally intense negotiations and tough market-driven deadlines. \"Diplomacy is the stuff of legend and lore,\" she told the Women\'s Foreign Policy group in Washington. \"Not so much finance ministries. But three and a half years into my tenure, I have come to think that the term financial diplomacy, while obscure, is apt.\" \"Financial diplomacy is predominantly about shaping the domestic economic policies of other countries when they matter to us and to the world.\" Brainard, the Treasury\'s key international negotiator, has had a front seat in talks on global crises in Europe and elsewhere over the past three years, helping to advise deals that have broad impact around the world. At 49, the mother of three has spent much of the past year on trips to Europe, where she presses the US experience in its 2008 crisis as an example of what Europe can do. She said Monday that Europe\'s leaders are now close to taking major decisions that can hold the eurozone together and cool the crisis. \"While classic diplomacy moves through the synapses of foreign ministries, financial diplomacy navigates through finance ministries and central banks.\" \"We work on financial and economic diplomacy because some economic decisions made in one country have an outsized impact on jobs and growth here in the United States and around the world. As transmission channels proliferate, policies designed for domestic circumstances can matter as much or more to other countries as any international treaty.\" Financial diplomacy isn\'t exactly new, said Brainard: negotiations between economic and market specialists were behind the formation of the International Monetary Fund and the World Bank in 1944, albeit at a leisurely pace over months. Now the pace is dictated by the how fast news hits markets -- \"under the glare of a global 24/7 business news cycle,\" as Brainard put it. In May 2010, officials from the eurozone and the G-7 leading countries had only 50 hours -- between the close of New York markets on Friday and the market opening in New Zealand on Monday -- to create Europe\'s crucial rescue fund, the European Financial Stability Facility, she said. She said Washington \"plays an outsized role in this system,\" because the dollar is the world\'s key reserve currency and the United States has the deepest financial markets. \"When we engage in financial diplomacy, our power is not primarily from our purse but from our ideas, our intensity, and our initiative. \"We succeed when we bring smart ideas to the table; when we take initiative; when we insist on policy solutions that will make a difference in people\'s lives.\"