Köhler sees standards and codes as a tool for growth and financial stability

• Pages: 90-91

Page 90

Following are edited excerpts of remarks prepared for delivery by IMF Managing Director Horst Köhler at the beginning of the IMF-World Bank Conference on International Standards and Codes, in Washington, DC, March 7-8. The full text of Köhler's remarks is available on the IMF's website (www.imf.org).

We have come a long way in building a consensus on the importance of internationally recognized standards and codes. But it is also clear that there are unresolved issues.Most important is the view of some emerging market and developing countries that the bar has been set too high. This conference is an important opportunity for the IMF, the World Bank, and other standard-setting bodies and forums represented here to hear your concerns and learn how we can help to make standards work for you.

Role of standards and codes

While standards and codes deal with highly technical matters, there is nothing narrow or technical about their purposes. They are an important tool for achieving the main objectives of the IMF-namely, to promote sustained growth, which is essential for reducing poverty in member countries, and greater stability in international financial markets. They are an integral part of the IMF's work on crisis prevention. But they are also crucial for our efforts to help member countries strengthen their financial systems and take advantage of the opportunities of global capital markets.

While it is still early in the game, there is already evidence that meeting standards can pay off. For example, countries that have introduced shareholder and creditor rights in line with international standards have developed deeper financial markets and, as a result, have grown faster than those countries where these rights are not protected by regulation. In countries where minority shareholder rights were protected, stock markets generally declined less during the recent emerging markets crises. In addition, it is fairly clear that countries like Argentina and Chile were better placed to resist contagion during the Asian crisis because they were known to have systems of banking supervision and capital adequacy that met or exceeded the Basel standards.

As a part of our constructive engagement with private financial markets participants, we have explored extensively the role of standards and codes in crisis prevention.

It is clear from these...