WASHINGTON, DC – The world is in the midst of an unprecedented financial crisis affecting all countries. Coordinated measures have been taken, unique in size and scope, to restore confidence and limit the damage caused to the world economy. President George W. Bush has invited world leaders to a summit in Washington on November 15 to design a new financial architecture that could prevent crises like this one from recurring. The International Monetary Fund, the only global institution with a mandate to protect financial stability, can play a central role.
Reform of the international financial architecture should focus on improved financial
supervision, more transparency in financial markets, an effective early-warning system for financial crises, and better international policy coordination.
The crisis has made it clear that national supervision of banks that operate globally is insufficient. Regulatory gaps have caused spillover effects to other countries. Crisis resolution mechanisms for banks that operate globally were absent. International coordination of regulation is clearly required.