What the IMF should do to sharpen its advice

Pages133

Page 133

In its report, the IEO argued that a concerted effort by IMF staff, management, the Executive Board, and member countries would be required to make the IMF more effective in its exchange rate policy advice. The IEO listed a number of recommendations that it encouraged the IMF's management and its Executive Board to consider:

  1. Clarify the rules of the game for exchange rate surveillance, for both the IMF and its member countries.

  2. Develop practical policy guidance on key analytical issues, for instance on the use and limitations of intervention in foreign exchange markets, building on the findings of an Executive Board policy review of the stability of the international monetary system.

  3. Ensure a more effective policy dialogue with member countries by developing a more strategic approach to these discussions and by adjusting organizational incentives for IMF staff.

  4. Resolve inconsistencies and ambiguities in the way the IMF classifies exchange rate regimes.

  5. Back up the IMF's advice on the choice of exchange rate regimes with more explicit analytical work.

  6. Ensure that the IMF is always at the forefront of new approaches and methodologies for assessing exchange rate levels.

  7. Take steps to find out what lies behind the...

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