Camdessus reviews main priorities for future of international monetary, financial system

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Following is the second part of an interview with IMF Managing Director Michel Camdessus conducted by the editors of the IMF Survey, in which Camdessus considers the future evolution of the IMF and the international monetary and financial system. The first part of the interview was published in the IMF Survey, December 13, 1999.

What will be the main priorities in the coming phase of reforming the international monetary and financial system?

CAMDESSUS: The financial foundations of the new architecture must be based on five basic principles: transparency, sound financial systems, private sector participation, the orderly liberalization of capital flows, and the modernization of the international markets on the basis of universally accepted standards.

Much has already been achieved. There is a consensus in a number of areas, particularly on transparency in policymaking and corporate affairs, on financial sector stability, and on working through standards and codes of practice toward stable, efficient, and transparent markets. While this work may not be complete, there is broad agreement on objectives.

A number of issues remain on the agenda:

First, there is the area of surveillance. Surveillance plays a central role in the work of the IMF. It is given priority when we allocate our human and budgetary resources, since the IMF alone has this mandate; it is growing in importance, and its primary focus is on matters that are the traditional responsibility of the IMF—issues of monetary stability, balance of payments sustainability, and growth-oriented economic policies.

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Since it is all too clear that major destabilizing factors can emerge anywhere and at any time, these traditional elements have now been supplemented by considerations involving the stability of banking and financial systems; governance; relations between governments, banks, and enterprises; and supportive social policies. There is also the question of how far the work of monitoring standards and codes of conduct should be integrated with IMF surveillance and enter into our day-to-day work. Some of the responsible agencies report that they do not have the capacity to monitor such implementation on their own. This raises the question of how far the IMF, with its limited resources, might use the surveillance process for such monitoring. The Executive Board is to discuss this issue in the next few months.

Second, exchange rate regimes and the conduct of economic policy have to be adapted to the new economic environment. It has frequently been noted that the countries affected by the recent crises had operated some form of pegged arrangement or tightly managed float, and this raises the question of whether such arrangements were...