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

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