World Affairs Council Address: Camdessus Outlines Agenda for International Monetary and Financial Reform

• Pages: 355-357

Page 355

Since mid-1997, when the Asian crisis first broke, we have seen almost unprecedented turmoil in international financial markets. After its onset in Thailand, the contagion spread to other countries in east Asia with a speed that caught everyone by surprise. The second round erupted in mid-August with Russia's moratorium on its debt servicing, leading to renewed, stronger pressures on many emerging countries around the world. Simultaneously, Japan, to which many had looked to help recovery in the east Asian countries, found itself in a deepening recession exacerbated by a severely stressed banking system. Even the other industrial countries were not immune. The emerging market crisis was a factor in the sharp third-quarter equity market correction in North America and Europe.

As the year progressed, it was clearly no longer appropriate to speak of a crisis affecting just Asia, or even emerging markets alone. Instead, we faced a crisis of the system of global finance that had not yet developed sufficiently to reconcile the needs of all participants- investors seeking new opportunities, emerging market economies seeking resources for investment, and governments seeking to ensure that markets operate safely and efficiently. Even if, in the past few weeks, an air of calm has begun to return to global markets, we could argue that the crisis in the functioning of the global financial system is certainly not over yet and that we now have a better opportunity to press ahead with fundamental reform.

The IMF-World Bank Annual Meetings last month focused world attention on the functioning of the international monetary system, bringing together three aspects of the responses to the crisis. While guarding against any premature sense of relief, it is possible to discern encouraging developments on all three fronts.

- Individual countries in crisis are courageously implementing policies to strengthen their economies and to warrant international support. Korea, Thailand, and even Indonesia are continuing to show promising signs that recovery could be around the corner. Throughout Latin America, countries have signaled their readiness to do whatever is necessary to maintain their access to international capital markets. This preemptive action is helping to defuse a potential crisis in the region. I hope that soon we will hear convincing announcements from Russia in its effort to tackle a most severe crisis.

IMF Approves $960 Million Credit For Indonesia

On November 6, IMF Managing Director Michel Camdessus announced that the IMF Executive Board had completed the second review of Indonesia's economic program under the Extended Fund Facility (EFF).

"I am pleased to announce," Camdessus said, "that the IMF's Executive Board, in support of the Indonesian government's economic program, approved...