Pedro Molina

The Elusive Search for Global Financial Rules

If the financial crisis is global, it is said, then the solution must be global: an international financial system that works better. But if the goal is better crisis prevention by preventing the accumulation of large global imbalances, proposals that would make IMF financing easier and weaken its surveillance powers will do more harm than good.

BRUSSELS – If the financial crisis is global, it is said, then the solution must be global : an international financial system that works better. And, because the Bretton Woods institutions (BWIs) – the World Bank and the International Monetary Fund – form the center of the international financial system, they must be included in the solution.

An enhanced international financial system must pursue two main lines of action. The first is to broaden the scope of international cooperation. At the moment, the Financial Stability Board, whose members include the G-20 countries, mainly pursues initiatives in this field.

A second line of action is to strengthen the international institutions’ soft powers to aim for more consistent economic policies, especially by systemically important economies. This would directly involve the Bretton Woods institutions, notably the IMF. A strengthening of the IMF was agreed after the Asian crisis in the 1990’s, and the G-7 summit in Cologne in 1999 mandated the Fund to play a strong surveillance role to ensure greater transparency and encourage early adjustment by countries with unsustainable balance-of-payments positions.

To continue reading, please log in or enter your email address.

To read this article from our archive, please log in or register now. After entering your email, you'll have access to two free articles from our archive every month. For unlimited access to Project Syndicate, subscribe now.


By proceeding, you agree to our Terms of Service and Privacy Policy, which describes the personal data we collect and how we use it.

Log in;

Cookies and Privacy

We use cookies to improve your experience on our website. To find out more, read our updated cookie policy and privacy policy.