Reforming the Global Financial Architecture

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A report prepared for the 1999 Commonwealth Finance Ministers Meeting, discussing the reform of international financial architecture. It argues that contemporary crises are very different from traditional balance of payments problems, and that developing countries are especially vulnerable. Six areas of discussion have been identified, some well known, others involving new initiatives. The report also identifies issues in the area of crisis resolution. It looks at the role of the Fund; incentives for the private sector; measures to deal with imprudent creditors and the design of adjustment programmes. It concludes by proposing a new governance structure.



Crisis Prevention in the New Architecture

The time-worn maxim that an ounce of prevention is worth a pound of cure is especially applicable to financial crises because the costs of managing such crises once they occur are very high compared to the cost of trying to avoid them. This is especially so if the impact of crises on the welfare of the poor is taken into account. The new architecture discussions have focused on six critical areas of crisis prevention.


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