Typical street scene in Santa Ana, El Salvador. (Photo: iStock)
IMF Survey: IMF Examines Scope to Revamp Regulation to Prevent Crises
March 13, 2009
Ahead of a series of international meetings on the global policy response to the world economic crisis, the IMF’s Finance & Development magazine examines the multiple facets of the recession and offers a variety of suggestions for strengthening regulation and governance to avert future crises.
Expanding the perimeter of regulation could help in preventing future crises, says article in new issue of F&D magazine (photo: Corbis)
The World in Crisis
With the world economy falling into a “Great Recession” of below zero growth this year, policymakers are looking for ways to reform the international financial system.
One key contributor to the global financial crisis was inadequate regulation. Regulatory structures must therefore be revamped to prevent another buildup of systemic risks, according to an article in the quarterly magazine.
The IMF has been examining several areas that will require attention to prevent systemic crises, such as providing liquidity to markets to ensure the smooth flow of funds for investment and the effective transmission of monetary policy, write Laura Kodres and Aditya Narain, authors of the article “What Is to Be Done,” which is based on a series of “lessons” papers written by the IMF’s Monetary and Capital Markets Department.
Other articles in the March issue of the magazine look at the effect of the crisis on globalization and the shape of the world economy, the dramatic slump in trade finance, the impact of the crisis on both public finances and countries’ external accounts, and ways to close crucial gaps in data and support early warning systems.
The World in Crisis
Jean Pisani-Ferry and Indhira Santos
The crisis and the national responses to it have started to reshape the global economy and shift the balance between the political and economic forces at play in the process of globalization. The drivers of the recent globalization wave are being undermined, and the spirit of protectionism has reemerged.
Laura Kodres and Aditya Narain
One key contributor to the global financial crisis was inadequate regulation. Regulatory structures must therefore be revamped to prevent another buildup of systemic risks and the provision of liquidity must also be improved. The IMF has been examining several areas that will require attention to prevent systemic crises.
Carlo Cottarelli
The impact of the crisis on public finances is substantial. This article offers a possible strategy whereby fiscal policy can foster the resumption of normal economic growth while maintaining public sector solvency.
Gian Maria Milesi-Ferretti
The ongoing financial crisis has caused dramatic changes in asset prices and exchange rates across the globe. These changes have significantly affected the external assets and liabilities of the main creditor and debtor countries.
David Hofman, Roberto Guimaraes, Alessandro Zanello, Isabell Adenauer, Norbert Funke, Charles Amo Yartey, and Siobhán McPhee
As world trade slumps, steel producer Ukraine and consumer electronics manufacturer Singapore face shriveling demand and drooping prices for their output. At the same time, cotton exporter Burkina Faso’s production reforms encounter fading textile buyers, and hi-tech nursery Ireland fails to keep its migrant labor employed.
Thomas Dorsey
The cost of trade finance has risen rapidly, while in some cases its availability has fallen, especially in emerging markets. According to a recent survey, banks anticipate these trends to continue in 2009.
Brad Setser
This crisis is still in its early stages. Past experience suggests that national decisions will do more to define the shape of the world's financial system than international summits.
Adelheid Burgi-Schmelz
This article examines what has been achieved in recent years to strengthen the international collection and distribution of statistical information, and makes suggestions for what should be done to further improve international cooperation and plug gaps highlighted by the crisis.
Leslie Lipschitz, Céline Rochon, and Geneviève Verdier
China is achieving comparatively strong growth even during the current global economic crisis, but a massive drop in employment is prompting a profound reconsideration of policy options.
James M. Boughton
History shows that reforming the international financial systems requires three ingredients: effective leadership combined with inclusive participation; clearly stated and broadly shared goals; and a realistic roadmap for reaching those goals.
People in Economics
Prakash Loungani
Profile of economist Nouriel Roubini, best known for predicting the current global economic crisis.
Comments on this article should be sent to imfsurvey@imf.org