The international monetary system is a topic that encompasses a wide range of issues—reserve currencies, exchange rates, capital flows, and the global financial safety net, to name a few. Some are of the view that the current system works well enough. I take a less sanguine view. Certainly the world did not end with the crisis that began in 2008 and a recovery is under way. But, it is not the recovery we wanted—it is uneven, unemployment is not really going down, there are widening inequalities, and global imbalances are back. Reform of the international monetary system may be wide-ranging and complex. But concrete reforms are needed to achieve the kind of well-balanced and sustainable recovery that the world needs, and to help prevent the next crisis.
As the global economics crisis abates, there is an emerging consensus that a better global financial safety net is needed to enable countries with good policies to insure against bad outcomes, especially when they are innocent by-standers caught in a financial turmoil. Last week the IMF took another step toward meeting this need by further enhancing its country insurance facilities. Reza Moghadam, head of the IMF’s Strategy, Policy, and Review Department, has authored this blog to coincide with a series of speeches about the reforms, including a scheduled speech at the Peterson Institute for International Economics next Monday. The blog outlines the two major changes: enhancements to our flagship insurance option—the Flexible Credit Line (FCL)—for countries with very strong policies and economic fundamentals; and the establishment of a new Precautionary Credit Line (PCL), which offers a new form of contingent protection for countries with some moderate vulnerabilities.
In Daejeon, Korea earlier this week, a remarkable event took place that enabled the world to hear the voice of Asia and to learn how the region has been able to show such great resilience in the face of the worst global financial crisis since the 1930s. On July 12 and 13, more than 1,000 officials, economists, bankers, analysts, and media assembled for a conference titled Asia 21: Leading the Way Forward, hosted by the Korean government and the IMF. I personally learned a great deal about Asia’s growing stake in the global economy—and the global economy’s growing stake in Asia. As the world strives to leave the crisis behind, the economic center of gravity is shifting increasingly eastwards, and Asia’s role is more vital than ever before.
Asia’s voice is getting louder and the IMF—and, indeed, the world—is listening. Blogging from the IMF and government of Korea-sponsored “Asia 21” conference in Daejeon, Korea, IMF Deputy Managing Director Naoyuki Shinohara reflects on the rise of Asia’s voice and leadership in global economic policymaking. The caliber of conference participants and the quality of dialogue speak volumes about the range and depth of expertise and experience in the region. The world needs Asian leadership, not only to sustain global growth, but also to develop policy mechanisms to contend with tomorrow’s economic challenges.
The Korean government and the IMF will jointly host a high-level international conference in Daejeon, Korea in just a few days time. In this blog, Anoop Singh outlines how the conference will be an important part of broader efforts by the Fund to enhance its strategic dialogue and partnership with Asia.