Lagarde Calls for a ‘New Multilateralism for 21st Century’

New trends in global economy call for strengthened commitment to new multilateralism

Challenge of more diverse world of more diffuse power

New multilateralism to be more inclusive, heeding world economy’s new voices

She pointed to “two broad currents” that would dominate the coming decades—increasing tensions in global interconnections; and increasing tensions in economic sustainability.

To address these emerging global tensions, she proposed:

“A solution that builds on the past and is fit for the future: a strengthened framework for international cooperation. In short, a new multilateralism for the 21st century.”

Elements of the new multilateralism

The major elements of this reinvigorated multilateralism would include:

• A renewed commitment to economic openness and to the “mutual benefits of trade and foreign investment;”

• Managing an increasingly complex international monetary system that has traveled “light years” since the original Bretton Woods system; and

• Building a global financial sector for the post-crisis era that “serves the productive economy rather than its own purposes.”

In addition, Lagarde said that the “new multilateralism” would demand a stronger sense of global responsibility if major issues such as climate change and inequality are to be tackled effectively.

“The kind of 21st century cooperation that I am thinking of will not come easy,” she said. “It might even get harder as time passes, when the curtains fall on this crisis and when complacency sets in—even as the seeds of the next crisis perhaps are being planted.”

Lagarde noted that there are already specific, working, forms of cooperation at hand, citing the UN, the World Bank, the World Trade Organization, and the IMF. These institutions might be termed concrete—or “hard”—forms of global governance, Lagarde said.

There are also a number of “soft” instruments that include such groupings as the G20 as well as networks of nongovernmental organizations. Lagarde said that these “hard” and “soft” forms of cooperation can complement each other:

“The new multilateralism must be made more inclusive—encompassing not only the emerging powers across the globe, but also the expanding networks and coalitions that are now deeply embedded in the global economy. The new multilateralism must have the capacity to listen and respond to these new voices.”

Getting beyond the current crisis

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