International Financial Architecture
On May 28-29, the IMF's Research Department held a conference, "Key
Issues in Reform of the International Monetary and Financial System," with a twofold
purpose: to broaden the debate on international financial architecture to issues of
international and financial reform more generally and to allow experts outside the usual
policy forums, notably from academe, to contribute to that debate.
The Case Against
Benign Neglect of Exchange Rate Stability
Benoît Coeuré and Jean Pisani-Ferry
Large fluctuations in the exchange rates of major currencies can be
extremely costly, not only for the countries directly involved but also for the rest of
the world. In this article, the authors propose a framework for international cooperation
in stabilizing exchange rates.
Fluctuations in Capital Flows to Emerging Market Economies
Michael Mussa, Alexander Swoboda, Jeromin Zettelmeyer, and Olivier
What challenges and constraints face proposals to moderate and cope with
volatility in international capital flows, and how can international public intervention
and regulation help to forestall and mitigate future crises?
Reversals, the Exchange Rate Debate, and Dollarization
Guillermo A. Calvo and Carmen M. Reinhart
More frequent and increasingly severe crises are encouraging emerging
market economies to seek means to make themselves less vulnerable to sudden stops in
capital flows. Capital controls have been widely discussed, but dollarization may offer a
longer-term and more market-friendly solution.
Private Sector Burden Sharing Impossible?
Finding ways to "bail in" the private sector is an important
element of crisis prevention and resolution. Yet no mechanisms are universally applicable,
and some proposed strategies could precipitate the crises they were meant to forestall.
International Monetary System
Cooperation and Coordination in Financial Market Surveillance
How should existing arrangements for the surveillance and supervision of
the international financial system be adapted to the challenges posed by increasingly
integrated markets? New initiatives, including setting up the Financial Stability Forum,
have recently been taken in this area.
The IMF and
the Lender-of-Last-Resort Function: An External View
Recent financial crises have led to renewed interest in having an
international lender of last resort. Would this make sense and, if so, would it be
appropriate for the IMF to play such a role?
Flows: Causes, Consequences, and Policy Responses
Large capital inflows can bring considerable economic benefits to
developing countries but, if not properly managed, can also cause economies to overheat,
increase exchange rate volatility, and lead eventually to large outflows. How can
governments maximize the benefits from capital inflows while minimizing the risks?
Equity Issues, and Poverty Reduction in Transition Economies
Grzegorz W. Kolodko
Ensuring that income is fairly distributed is always a concern of
policymakers, but such a focus is especially important during the early years of systemic
change and contraction in transition economies. It is often difficult, when formulating
policy in these countries, to resolve income distribution issues because of their social
and political implications. Poland's experience suggests that fast growth makes a
The Role of the
Currency Board in Bulgaria's Stabilization
Bulgaria's latest stabilization program, which included the introduction
of a currency board, marked the end of a period of economic turmoil and
near-hyperinflation. What accounts for its success?
Price Shocks Last Too Long for Stabilization Schemes to Work?
Paul Cashin, Hong Liang, and C. John McDermott
Shocks to world commodity prices can have a profound impact on the
economies of both exporting and importing countries. However, the longer it takes for a
price shock to reverse itself, the less likely it is that price stabilization schemes will
Financial Crisis: What Have We Learned?
Now that the Asian crisis is behind us, what lessons can we draw from the
experience, and how can we use this knowledge to forestall future crises and minimize
damage from those that occur?
Asia's Financial Crisis on Cambodia and the Lao PDR
Ngozi Okonjo-Iweala, Victoria Kwakwa, Andrea Beckwith, and Zafar Ahmed
Studies of the impact of the East Asian financial crisis on Cambodia and
the Lao PDR highlight the importance of macroeconomic management, particularly in the face
of serious shocks.
State as Corporate Shareholder
Harry G. Broadman
Despite China's commitment to reforming state-owned enterprises, many are
still not operating like commercial businesses. Although some of the enterprise reforms
have worked, others have led to unanticipated problems. This article outlines some
measures that could improve the process.
Balance Sheets and Macroeconomic Policy
Dale F. Gray and Mark R. Stone
The relationship between corporate balance sheets and a country's
macroeconomy is receiving increased attention from policymakers in many countries,
especially those most affected by the Asian crisis. How can policymakers assess problems
in the corporate sector and prevent or ameliorate crises?