The Solution Is More, Not Less Europe


By Antonio Borges

(Versions in عربي,  中文, 日本語EspañolFrançais)

It is hard to hold the course in the middle of a storm, but European policymakers need to if they want European integration to succeed. The sovereign debt crisis is a serious challenge, which requires a strong and coordinated effort by all involved to finally put it behind us.

Surviving the storm will be of little consequence if the euro area finds itself trapped in the perpetual winter of low growth. Germany may be expanding at record speed right now, but it wasn’t so long ago when it grew much more slowly—just 1.5 percent per year between 1995 and 2007. In contrast, Sweden grew by 3 percent a year and the United States by 2 percent during the same period.

Many experts fear that without reforms, growth in Germany could drop even lower in the next 5‑10 years and beyond when global trade cools again. The situation is worse in the countries that currently find themselves in the eye of the storm.

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A Stronger Financial Architecture for Tomorrow’s World


By Dominique Strauss-Kahn

(Version in Español Français 日本語)

The international monetary system (IMS) is a topic that encompasses a wide range of issues—reserve currencies, exchange rates, capital flows, and the global financial safety net, to name a few. It is one of the key issues on the G-20’s work agenda for 2011, and a topic that is eliciting lively discussion—for instance the recent, insightful report of the group chaired by Michel Camdessus, called the “Palais-Royal Initiative”.

Some are of the view that the current system works well enough. While not perfect, they point to its resilience during the crisis, citing the role of the U.S. dollar served as a safe haven asset. And now that the global recovery is underway, they see little reason to worry about the IMS. In other words, “if it ain’t broke, don’t fix it”.

I take a less sanguine view. Continue reading

Forewarned Is Forearmed: How the Early Warning Exercise Expands the IMF’s Surveillance Toolkit


By John Lipsky

“Never again can we let ourselves be caught unprepared by an economic and financial crisis of such global magnitude.” This was the spirit in which G-20 Finance Ministers in late 2008 tasked the IMF and the newly-formed Financial Stability Board to jointly develop an Early Warning Exercise (EWE), to be ready by the IMF’s 2009 Istanbul Annual Meetings.

The inspiration was clear: In the wake of the September 2008 onset of unprecedented financial turmoil, policymakers recognized that earlier danger signs had not been synthesized into an actionable warning. The EWE was intended to fill the analytical gap: the goal is to produce an effective “call to arms” as threats emerge—but well before crises erupt. Continue reading

Global Safety Nets: Crisis Prevention in an Age of Uncertainty


By Reza Moghadam

Though the recent global crisis started in the advanced economies, most emerging markets came under pressure; it seemed that no country, especially those most interconnected, was immune from tremendous economic strain. Now, as the crisis abates, there is an emerging consensus that something needs to be done. A better safety net is needed to enable countries with good policies to insure against bad outcomes, especially when they are innocent bystanders caught up in a financial turmoil.

Last week, the IMF took another step toward meeting this need by enhancing its country insurance facilities. Continue reading

Listening to and Learning from Asia


By Dominique Strauss-Kahn

(Version in 中文,  日本語 and 한국어)

In Daejeon, Korea earlier this week, a remarkable event took place that enabled the world to hear the voice of Asia and to learn how the region has been able to show such great resilience in the face of the worst global financial crisis since the 1930s. On July 12 and 13, more than 1,000 officials, economists, bankers, analysts, and media assembled for a conference titled Asia 21: Leading the Way Forward, hosted by the Korean government and the IMF. I personally learned a great deal about Asia’s growing stake in the global economy—and the global economy’s growing stake in Asia. As the world strives to leave the crisis behind, the economic center of gravity is shifting increasingly eastwards, and Asia’s role is more vital than ever before.

Our objectives with this conference, jointly organized with the superb help of our Korean partners, were three-fold:  Continue reading

Asia and the IMF: A Closer Engagement


By Anoop Singh

In just a few days’ time, the Korean government and the IMF will jointly host a high-level international conference in Daejeon, Korea. At the Fund, we are trying continually to enhance our strategic dialogue with Asia, and the conference is an important part of this effort.

Asia’s leadership of the global recovery is undeniable, as I have said in earlier blogs. And the extensive reforms and improved macroeconomic policy frameworks that underpinned the region’s remarkable resilience to the global crisis will see Asia’s successes continue. In just two short decades, we expect it to become the largest economic region in the world.

The Korea conference will be an opportunity to showcase Asia’s economic successes, and also highlight the importance of regional integration and cooperation, which has been growing rapidly in Asia.

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Rethinking the IMF’s Mandate: Asking for Your Views


By Reza Moghadam

The IMF is rethinking its role in the post-crisis world to ensure it is working most effectively for its 186 member countries, and helping them avoid another global recession, with all that implies for trade, jobs, and living standards.

At the IMF-World Bank meetings in Istanbul in October 2009, the IMF was called on by its policy steering committee to rethink its mandate. The IMFC wanted to ensure that the IMF is able to cover―and I quote here from the communiqué that was issued in October 2009―“the full range of macro and financial sector policies that bear on macroeconomic global stability.”

The conclusions of this work will be discussed at our upcoming Annual Meetings in Washington D.C. The issues are rather complex, as you can imagine. We will be issuing a series of papers for discussion by the IMF’s Executive Board in the coming months. Our first discussion paper was published on February 26.

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Stepping Up the Fight Against Money Laundering and Terrorist Financing


By Sean Hagan and Jody Myers

The international community has made the fight against money laundering and terrorist financing a priority. The IMF is especially concerned about the possible consequences of money laundering and the financing of terrorism on our members’ economies and on international financial stability.

The IMF’s Legal Department has the lead on the Fund’s work in combating money laundering and the financing of terrorism, and our work includes assessments of countries’ compliance with the international standard on anti-money laundering and combating the financing of terrorism (AML/CFT), technical assistance, research, and policy development.

Investors in pyramid scheme company VEFA speak to official in Tirana, Albania, in 1998 (photo: AFP)

Building on the results of our recent work on the risks from money laundering and the macroeconomic impacts of money laundering and predicate crime, we are seeking to integrate AML/CFT more fully into the Fund’s surveillance and Financial Sector Assessment Programs (FSAPs).

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Freedom of IMFormation


By Reza Moghadam

With the global financial crisis, the world is increasingly looking to the International Monetary Fund—not just for financing but as the global institution charged with overseeing members’ economies and policies (what we call surveillance). It’s easy to forget that only 10 years ago the Fund was a secretive institution. That’s no longer the case. Communicating and engaging with the world at large is now a normal and essential part of the Fund’s business.

The IMF today is a very open institution. The vast majority of our reports are published. The public can search the IMF’s archives. And we are making lots of effort to reach out to external stakeholders.

The benefits of this increased transparency, both for the Fund’s surveillance and lending activities, are indisputable. Transparency allows us to engage with the public and to build a broader understanding and support of what we do. It benefits the quality of our advice by subjecting our analysis to outside scrutiny. And more generally, it makes us more accountable for our advice and financial decisions. In all, it makes us a more effective and legitimate institution.

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