by Edwin M. Truman, Peterson Institute for International Economics
View full document [pdf]
The central challenge facing the global economy and financial system today is the failure of countries to limit the negative effects of their policies on other countries and on global economic and financial stability. The most prominent manifestations of this challenge are the balance-of-payments adjustment process and the notorious asymmetry therein, spillovers from other countries' financial-sector policies such as those involved in the crisis of 2007–10, and the prospect of sustained unbalanced growth in the global economy with some countries overheating and others facing substantial excess capacity.
Truman proposes an approach to strengthen International Monetary Fund (IMF) surveillance over the economic and financial policies of its member countries—an approach that builds on members' IMF obligations with a view to producing significant promise of affecting their policy choices. His proposed approach has five integrated components: (1) updated obligations of IMF membership, (2) development of a set of norms to guide members in meeting those obligations, (3) a process to apply judgment in monitoring compliance with those obligations via the use of the norms, (4) accountability in the application of such judgment based on transparency, and (5) potential consequences for member countries that are judged not to have complied with their obligations. The crux of the approach is to enhance IMF members' obligations to contribute to global economic and financial stability and to strengthen IMF surveillance of those obligations through the use of norms and a transparent peer review process that leads to improved policies and outcomes.
Policy Brief 14-9: IMF Reform Is Waiting on the United States March 2014
Policy Brief 13-7: The Congress Should Support IMF Governance Reform to Help Stabilize the World Economy March 2013
Book: A Strategy for IMF Reform February 2006
Working Paper 11-5: Integrating Reform of Financial Regulation with Reform of the International Monetary System February 2011
Working Paper 10-14: Reform of the Global Financial Architecture October 2010
Testimony: The Role of the International Monetary Fund and Federal Reserve in the Stabilization of Europe May 20, 2010
Op-ed: How the Fund Can Help Save the World Economy March 5, 2009
Article: Economists Seek IMF Reform January 26, 2009
Policy Brief 07-1: The IMF Quota Formula: Linchpin of Fund Reform February 2007
Op-ed: The IMF Should Heed This Resignation July 25, 2012