After the Financial Crisis
Edited by Sylvester Eijffinger and Donato Masciandaro
Chapter 13: Out-of-the-Box Thoughts about the International Financial Architecture
Barry Eichengreen1 Introduction There is a good deal of conventional wisdom about what needs to be done to strengthen the international financial architecture in the wake of the global credit crisis. Countries must upgrade their supervision and regulation of financial markets and institutions. They must support demand while at the same time avoiding the reemergence of global imbalances. The IMF should strengthen its surveillance of policies and markets in order to better anticipate systemic risks. It should streamline its procedures for disbursing resources. It should reconfigure its seats and votes to better reflect the economic and political realities of the 21st century. There is broad consensus on the desirability of these measures, though specifics are another matter. But there is also the question of whether these incremental changes are enough to make the world a significantly safer financial place. Aren’t more radical reforms required? Shouldn’t aspiring reformers set the bar higher? The reality is that changes in the international financial architecture are almost always incremental. The membership of existing institutions is expanded rather than creating new institutions out of whole cloth. Regulations on the books are revised. Quota 1 An earlier version of this work was published both in the ‘Milken Review’ and in the Journal of International Commerce, Economics and Policy, Vol. 1(1), pp. 1–20, April 2010. For comments I am grateful to Tam Bayoumi, Morris Goldstein and Peter Kenen, who certainly should not be implicated in anything that follows. 354 Out-of-the-Box Thoughts 355 formulas are tweaked....
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