{
  "title": "Evolution not Revolution: The Changing Role of the IMF in the Global Economy, by Anne O. Krueger, First Deputy Managing Director, IMF",
  "publication": "IMF News, February 23, 2006",
  "sourceUrl": "https://www.imf.org/en/news/articles/2015/09/28/04/53/sp022306",
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  "overlayPath": "/en/news/articles/2015/09/28/04/53/sp022306/index.md",
  "summary": "Address to International Development Club, Graduate School of Business, Stanford University",
  "publishDate": "2006-02-23",
  "sections": [
    {
      "heading": "Historical foundation and postwar context",
      "content": "- IMF origins: Bretton Woods conference, July 1945; representatives of 45 countries.\n- Intended objectives:\n  - Establish a well-functioning and stable international financial system based on multilateralism and rules.\n  - Replace competitive devaluations and discriminatory exchange controls with a rules-based system to promote trade and payments cooperation.\n- Pre-Bretton Woods historical data:\n  - Between 1929 and 1932 the world price index, measured in gold values, fell by 47.5 percent.\n  - In the same period, the gold value of world trade fell by 63 percent.\n- Institutional complements:\n  - International Bank for Reconstruction and Development (World Bank) to channel investment.\n  - General Agreement on Tariffs and Trade signed in 1947; succeeded by the World Trade Organization in 1995.\n- Early implementation facts:\n  - First meeting of the IMF's Board of Governors: March 1946, Savannah, Georgia; 38 countries had joined or joined during the meeting."
    },
    {
      "heading": "The Fund’s role, instruments, and evolution",
      "content": "- Core mandate: maintenance of international financial stability through a combination of obligations and benefits for members.\n- Membership and governance:\n  - Members buy shares according to a quota system and undertake to abide by Fund rules (e.g., Article VIII obligations).\n  - Access to Fund financial resources for temporary balance of payments problems.\n- Surveillance:\n  - Article IV consultations began in 1952; evolved from exchange-rate focus to broad macroeconomic policy discussions.\n  - Multilateral surveillance expanded: modest precursor to the World Economic Outlook in 1969; first WEO published in 1980.\n- Technical assistance:\n  - Now accounts for about a third of the Fund's activities.\n  - Early provision began in the late 1940s.\n- Financial support:\n  - Designed to give member countries breathing space to make policy adjustments (including fiscal rebalancing and exchange rate adjustments where needed).\n  - Facilities expanded for low-income members, including the recently approved Exogenous Shocks Facility."
    },
    {
      "heading": "Membership growth and empirical outcomes",
      "content": "- Membership expansion:\n  - 38 members in 1946; 68 in 1960; 184 members at the time of the speech.\n- Postwar economic outcomes:\n  - Rapid growth among major industrial countries between late 1940s and early 1970s:\n    - United States: average annual growth in real GDP per capita of 2.4 percent between 1950 and 1973.\n    - Germany: 5 percent (same period).\n    - Japan: more than 8 percent.\n  - Korea: per capita income increased roughly twelve fold between 1960 and 2005.\n- Noted vulnerabilities: protectionism, fiscal deficits, weak macro policies in various regions constrained growth (examples cited: Latin America, some oil-exporting countries, parts of Africa)."
    },
    {
      "heading": "Lessons from crises and policy implications",
      "content": "- Nature of 1990s crises:\n  - Shift to large private international capital flows created capital account crises (Mexico 1994; Asia 1997-98; Russia 1998).\n  - Asian crisis net flow data:\n    - Net inflows to the Asian crisis countries were over 6 percent of their GDP in 1995.\n    - Just under 6 percent in 1996.\n    - In 1997, net outflows were 2 percent of GDP.\n    - Net outflows rose above 5 percent in 1998.\n- Identified causes and amplifiers:\n  - Rapid, indiscriminate credit expansion → rise in non-performing loans.\n  - Fixed exchange rate regimes and currency mismatches magnified the impact of reversals.\n  - Weaknesses in domestic banking systems and poor credit assessment.\n- Key policy lessons:\n  - Sound macroeconomic frameworks: low or falling inflation, budgetary prudence, sustainable public debt.\n  - Importance of flexible exchange rate regimes to allow adjustment to shocks.\n  - Central role of a strong, transparent financial sector and effective regulation.\n  - Transparency and good governance as enduring policy priorities."
    },
    {
      "heading": "Applied lessons: country case studies",
      "content": "- Brazil:\n  - Crisis in early 1999; program supported by the Fund during the 2002 pre-election period committed new government to maintaining fiscal, monetary and exchange rate frameworks.\n  - Outcomes:\n    - External financing needs fell sharply; debt position strengthened.\n    - In 2004 there were about four and a half million fewer Brazilians living on less than a dollar a day than there had been only three years earlier.\n    - Brazilian government repaid all its outstanding debt to the Fund, well ahead of schedule (as of end of last year referenced in speech).\n- Turkey:\n  - Longstanding inflation problems; inflation had been above 60 percent a year from the late 1980s.\n  - Crisis starting in 1999 and banking crisis in 2000-1 led to wholesale reforms supported by a Fund program.\n  - Inflation dynamics:\n    - Inflation fell from more than 70 percent just three years ago to below 8 percent in 2005.\n    - It is expected to fall further, to 5 percent, this year.\n  - Fund financing: a new $10 billion standby arrangement agreed last year in support of the program."
    },
    {
      "heading": "Financial sector work and standards",
      "content": "- Financial Sector Assessment Program (FSAP):\n  - Introduced in 1999; conducted jointly with the World Bank for developing countries.\n  - Well over 100 members have had, or requested, an FSAP.\n  - Countries cited as beneficiaries include Britain, Iceland, Russia and Nigeria.\n- Standards and Codes / ROSCs:\n  - Joint work with the World Bank to encourage transparency across twelve areas including banking supervision, securities regulation and insurance supervision.\n- Emphasis: surveillance of financial sector vulnerabilities and promotion of international best practice in regulation and transparency."
    },
    {
      "heading": "Technical assistance, surveillance, and programmatic priorities",
      "content": "- Technical assistance areas include:\n  - Customs procedures, tax administration, public expenditure management, foreign exchange market development, monetary policy management, pension reforms.\n- Surveillance tiers:\n  - Global (WEO), regional, and national (Article IV consultations).\n  - Regional surveillance highlighted for closely integrated areas (example: Euro area).\n- Objectives across instruments:\n  - Ensure policies that deliver macroeconomic and financial stability.\n  - Lay foundations for sustained growth and poverty reduction.\n  - Support institutional reforms (property rights, contract enforcement) to make macro frameworks sustainable and to attract investment."
    },
    {
      "heading": "Conclusion: adaptation, continuity, and priorities",
      "content": "- Central assertions:\n  - IMF mandate remains relevant; maintenance of international financial stability is more important in a rapidly integrating global economy.\n  - No single revolution anticipated: change is continuous and evolutionary for both national governments and the Fund.\n- Enduring policy emphases identified since the 1990s:\n  - Sound fiscal policies and sustainable debt levels.\n  - Central role of a sound financial sector for growth.\n  - Preference for flexible exchange rate regimes to adjust to shocks.\n  - Structural reforms and institutional frameworks that respect property rights and contract enforcement to encourage enterprise.\n- Overarching goal:\n  - By fostering growth within a stable international economic environment, the IMF continues to play a central role in enabling accelerated growth, rising living standards, and poverty reduction.\n\nRemarks by Anne O. Krueger, First Deputy Managing Director, IMF; Address to International Development Club, Graduate School of Business, Stanford University; February 23, 2006.\n\n---\n\n\n References\n\n- PRESS CENTER\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2015/09/28/04/53/sp022306"
    }
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    "Published: February 23, 2006",
    "IMF origins: Bretton Woods conference, July 1945; representatives of 45 countries.",
    "Intended objectives:",
    "Pre-Bretton Woods historical data:",
    "Institutional complements:",
    "Early implementation facts:",
    "Core mandate: maintenance of international financial stability through a combination of obligations and benefits for members.",
    "Membership and governance:",
    "Surveillance:",
    "Technical assistance:",
    "Financial support:",
    "Membership expansion:",
    "Postwar economic outcomes:",
    "Noted vulnerabilities: protectionism, fiscal deficits, weak macro policies in various regions constrained growth (examples cited: Latin America, some oil-exporting countries, parts of Africa).",
    "Nature of 1990s crises:",
    "Identified causes and amplifiers:",
    "Key policy lessons:",
    "Brazil:",
    "Turkey:",
    "Financial Sector Assessment Program (FSAP):",
    "Standards and Codes / ROSCs:",
    "Emphasis: surveillance of financial sector vulnerabilities and promotion of international best practice in regulation and transparency.",
    "Technical assistance areas include:",
    "Surveillance tiers:",
    "Objectives across instruments:",
    "Central assertions:",
    "Enduring policy emphases identified since the 1990s:",
    "Overarching goal:",
    "[PRESS CENTER](http://presscenter.imf.org/)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
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