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.



Summary and Conclusions

It is evident from our review that the phrase ‘new financial architecture’ appears, in retrospect, somewhat hyperbolic. What has emerged after two years of discussions is not a blue print for an entirely new architecture, but a set of proposals to fill gaps in the existing system and strengthen it in places. However, as pointed out in the introduction, the incremental nature of the changes envisaged is not necessarily a shortcoming.


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