Chapter 6: In Search of International Monetary and Financial Stability
6. In search of international monetary and ﬁnancial stability However compelling the argument that global ﬁnancial markets require a global ﬁnancial regulator, global bankruptcy court, global money and a global central bank, realism requires acknowledging that national governments are not prepared to turn over signiﬁcant additional powers to a super-IMF. Barry Eichengreen (1999b, p. 3) Reforming the international ﬁnancial architecture without reforming the currency regime is like watching Hamlet without the Prince [of Denmark]. The international monetary system will continue to be ineﬀective and crisis prone until that crucial centrepiece of its operation is thoroughly revamped. Goldstein Report (1999, p. 129)1 The perception that the IMF is asleep at the wheel on its most fundamental responsibility – exchange rate surveillance – is very unhealthy for the institution and the international monetary system. Timothy D. Adams (2006, p. 135) The IMF is in eclipse as the pre-eminent institution of international ﬁnancial cooperation. Consequently, the world is worse oﬀ. Despite the considerable reforms during the past decade, more should be done. Edwin Truman (2006, p. 119) 6.1 COPING WITH CRISES The reaction of the international community to the various episodes of instability that have periodically shaken the international monetary and ﬁnancial system has on the whole been characterized by partial responses and ad hoc interventions, at least until the 1990s. Towards the end of the second millennium, the need for a more systematic and comprehensive approach to global ﬁnancial instability was increasingly recognized due to the growing number of crises and...
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