## Weekend in Washington: Cooperating Our Way Out of Crisis

_IMF Blog, October 12, 2010_

## Source details

**Canonical URL:** [Weekend in Washington: Cooperating Our Way Out of Crisis](https://www.imf.org/en/blogs/articles/2010/10/12/weekend-in-washington-cooperating-our-way-out-of-crisis)

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## Bibliographic details
- Authors: Dominique Strauss-Kahn
- Published: October 12, 2010

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### Overview
- Author: Dominique Strauss-Kahn
- Date: October 12, 2010
- Context: Economic leaders of 187 countries met during the IMF and World Bank Annual Meetings in Washington DC amid a fragile and uneven global recovery.

### Major risks identified
- High public debt
  - Advanced economies have the highest public debt levels since World War Two.
  - Policy guidance: In the medium term, restore fiscal sustainability; in the short term, "consolidate as much as you have to, and stimulate as much as you can."
  - Key risk: growth stalling poses the greatest threat to fiscal sustainability.
- Jobs and labor markets
  - The world lost 30 million jobs during the crisis.
  - 450 million more people will enter the labor market over the next decade.
  - Policy objective: achieve growth that generates employment; "This crisis will not be over until we see unemployment levels begin to go down."
- Financial sector vulnerabilities
  - Although there has been progress and new regulations from the Basel III process, implementation remains incomplete.
  - Needs: ensure new rules are implemented and develop better tools to resolve financial crises.
  - Assessment: "The financial system is not yet safe enough."
- Erosion of international cooperation
  - Concern that the strong cooperation shown during the crisis is receding.
  - Cited risk: headlines about "currency wars" and competitive devaluations.
  - Assertion: "beggar-thy-neighbor policies do not work" and "There are no solely domestic solutions to global problems."

### Outcomes and common ground from the meetings
- Commitments and shared positions
  - Strong commitment to "the rejection of protectionism in all its forms."
  - Strong statement about the importance of "working collaboratively" to ensure growth and create jobs.
  - Recognition of the need to go further on financial sector reform and a call for the IMF to contribute in collaboration with other international bodies.
- IMF role and governance
  - Membership requested the IMF focus more on "spillover" issues—the effect that one country’s policies might have on others—to help address tensions and aid global rebalancing.
  - Reiteration of the need to enhance the voice and representation of emerging market and developing countries in the IMF to better reflect their standing in the new global economy.
  - Status: No final agreement reached on "quota and governance" reforms over the weekend, but progress indicated ("we are not far off").

### Policy implications and recommendations
- Maintain a balance between fiscal consolidation and stimulus in the short term while pursuing fiscal sustainability in the medium term.
- Prioritize policies that generate job-rich growth to absorb 450 million new labor market entrants over the next decade and reverse the 30 million jobs lost.
- Accelerate implementation of Basel III and develop stronger crisis-resolution tools to make the financial system safer.
- Preserve and strengthen international policy cooperation to avoid protectionism and counterproductive competitive devaluations.
- Enhance IMF analysis of cross-country "spillover" effects and adjust IMF governance to increase emerging-market and developing-country representation.

### Key statistics and projected impacts of improved coordination
- Improved economic policy coordination over the next five years could:
  - Increase global growth by 2.5 percent.
  - Create or save 30 million jobs.
  - Lift 33 million more out of poverty.

### Conclusion
- Progress was made during the Washington meetings, but significant risks remain and global recovery is not yet secured.
- Continued and strengthened international cooperation will be central to achieving sustainable, balanced growth, reducing financial risks, and restoring employment.
- Attention shifts to the next G-20 leaders meeting in Korea in November, where these questions will be high on the agenda.

*Source: Weekend in Washington: Cooperating Our Way Out of Crisis, Dominique Strauss-Kahn, October 12, 2010*

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## References

- [Annual Meetings of the IMF and World Bank](http://www.imf.org/external/am/2010/)
- [International Monetary and Financial Committee](http://www.imf.org/external/np/cm/2010/100910.htm)

_Source: https://www.imf.org/en/blogs/articles/2010/10/12/weekend-in-washington-cooperating-our-way-out-of-crisis_