WASHINGTON, D. C: The gathering pace of globalization, especially of financial markets; the transition of many countries from planned to market economies; and the longstanding plight of impoverished peoples offer never-ending challenges. What is the International Monetary Fund's role in confronting them? For 13 years I was privileged to lead an IMF whose strengths include fostering economic cooperation and providing advice and assistance to 182 countries as varied as the United States and the smallest Pacific island nation. The IMF does this on the basis of a clear, tried and tested mandate that is as relevant today as when the IMF was created over half a century ago.
Adaptability to change has always been a hallmark of the Fund. The IMF's focus remains on macroeconomic policies that foster sustainable growth. But in response to a need demonstrated by recent financial crises, the Fund now places stronger emphasis on developing sound financial systems, and on good governance and transparency.
Yet crisis management remains our best known activity. This encompasses both headline-grabbing situations of imminent economic collapse, as well as less visible help to countries struggling to attain external viability and growth, or to countries seeking help before problems become a crisis. As a self-reforming institution, the IMF reviews constantly both the kinds of advice and loans it offers to support these countries. But when it comes to crisis prevention is better than cure. So we are modernizing our loans to serve our entire membership better and to avoid crises spreading.
Central to international monetary stability is the question of exchange rate regimes. A lively debate is now in progress, including over the euro's role once it reaches its full potential as a major reserve currency. Related to this, and clearly a result of recent crises in Asia and other emerging markets is a broad effort to reform the architecture of the entire international financial system, an effort that must continue despite today's rosier global economic outlook. Here the IMF retains a key role in several areas.