Macro Economy

Macro Economy Proceedings, Issue No. 4, February 2009 (PDF: 999kb)

Contents:

REFORMING THE INTERNATIONAL FINANCIAL ARCHITECTURE AFTER TEN YEARS: The View from Emerging Markets

BARRY EICHENGREEN

Eichengreen sets the context by looking back at the evolution of the international financial system over the last decade-at reforms proposed in response to the 1997-98 Asian crisis and at unanticipated developments resulting from the shifting emphasis in emerging markets toward sustaining current account surpluses. He then examines the systemic problems highlighted by the ongoing crisis. Finally, Eichengreen outlines the issues such as transparency, supervision, and governance that will feature in the impending debate on reform of the international financial architecture. He warns that a new Bretton Woods Conference to discuss the global system is welcome but a return to pegged exchange rates would be a step in the wrong direction.

IS THE IMF WORTH FUNDING?

EDWIN M. TRUMAN

Truman focuses on one of the system's central institutions, the International Monetary Fund. He reviews the IMF's progress on reform and its role in the current crisis by way of assessing a package of IMF-related measures before the U.S. Congress. The increased funding the package would authorize is critical to maintaining the IMF's role in promoting global economic growth and financial stability. Truman's answer to the question in the title is affirmative, although his recommendation on congressional approval of the existing package is more nuanced-depending on timing and on the likelihood that renewed calls for reform of the international financial architecture produce meaningful improvements over the governance changes in the current package.

THE FUTURE OF THE IMF AND OF REGIONAL COOPERATION IN EAST ASIA

YUNG CHUL PARK & CHARLES WYPLOSZ

Park and Wyplosz ask whether regional-level institutions of financial cooperation could have a place alongside the IMF in the expected reform of the international financial architecture, and what they should look like. In particular, they analyze the evolution and limitations of cooperative financial arrangements instituted in East Asia since that region was struck by crisis a decade ago. The authors suggest that by assuring access to liquidity, the bilateral swap agreements (BSAs) under the Chiang Mai Initiative and their offspring, the self-managed regional pooling arrangement (SRPA) may help deter East Asian member countries from returning to destabilizing, reserve-accumulating growth strategies.