IMF keeps pace with a changing world
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Page 172
Over the past 60 years, the world's financial landscape has undergone extraordinary changes, and the IMF "has continually evolved to meet the needs of its members and the international economic system," according to Managing Director Rodrigo de Rato, addressing a joint IMF-Bundesbank symposium on June 8 in Frankfurt, Germany. He reviewed the origins and principal changes in the organization and shared some key ideas that are emerging from the IMF's current medium-term strategic review, which he initiated. The following is a summary of his remarks; the full text is available on the IMF's website (www.imf.org).
The IMF has always had as its central concern the health and stability of the world economy, but just as the world economy has had to absorb significant changes in technology, politics, culture, and economics, the IMF, too, has had to adapt. After the Bretton Woods system of fixed exchange rates collapsed in the early 1970s, an amendment to the IMF's Articles of Agreement led to a reorientation of its functions.
In particular, in recognition of the close relationship between domestic economic policies and international stability, the IMF established a surveillance process that, de Rato observed, "to this day forms the basis for our systematic and comprehensive review of economic conditions and policies in each member country."
Similarly, its work with new members led to requests for advice and assistance beyond the traditional macroeconomic areas of fiscal and monetary policy and exchange rate systems.
The IMF found itself helping countries establish institutions of monetary and fiscal policy, and devise supply-side structural policies to promote growth. After the dissolution of the former Soviet Union, the IMF provided assistance for formerly centrally planned economies to make the transition to market-based systems.
IMF financing underwent a great transformation, too, with concessional lending to low-income countries being added to its traditional short-term lending for balance of payments needs. Rapid development of international capital markets occasioned special financing policies to allow the IMF to assist countries facing capital account crises, and the IMF began to play an unanticipated role in facilitating the resolution of sovereign debt problems.
As it continues to serve the interests of its member countries and the international community, the IMF "has to be in a...
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