Washington, 15 April 1998 (RFE/RL) -- A global consensus seems to have developed in recent weeks that it is time to restructure and strengthen what is being called "the architecture" of the international financial system.
This week in Washington the leadership of the International Monetary Fund (IMF) and the World Bank, as well as the top financial officials of 22 rich, poor and transition nations will attempt to draw up a basic blueprint for remodeling the global system.
IMF Managing Director Michel Camdessus says the Asian financial crisis brought the weaknesses and deficiencies of the present system to the forefront and the staff of the fund has already been looking at what it can do better in the future.
But the review needs to be broader than that, says Camdessus, so the fund's policy-making Interim Committee, which holds its regular spring meeting Thursday morning in Washington, will spend most of its time talking about what needs to be changed.
The 24-member committee represents the entire 181 nation membership of the fund -- the large economies have their own representatives, the smaller ones are represented in groups or constituencies.
Camdessus says the real challenge is to find the best possible use of the instruments at hand to turn the risks of the present system into opportunities.
The IMF head says three aspects of the global economy need to be addressed -- the new role of massive and instantaneous information, the enormous potential of now predominantly private flows of capital, and the refining of institutions like the IMF to be permanently in the process of reform.
Beyond the official IMF Interim Committee, however, the U.S. has invited the finance ministers and central bank governors from 22 countries, including Russia and Poland, to a special conference Thursday afternoon and evening to draw up a basic blueprint for the new architecture and perhaps even form into working groups to following through.
U.S. Treasury Secretary Robert Rubin, who will be hosting the special meeting with U.S. Federal Reserve (Central Bank) Chairman Alan Greenspan, says he wouldn't call it a new "Bretton Woods" conference -- the 1940s meetings which originally formed the IMF and the World Bank.
Rather, says Rubin, the system needs to be adapted to the greater intellectual and political complexities of a global system that has changed substantially over the past decade.
In a speech in Washington Tuesday, Rubin said that to make the international financial system stronger, better able to assess national vulnerabilities and promote needed reforms, the conference should propose action in three key areas:
First, he said, there is need for a complete range of global standards for banking and financial organization to guide individual governments.
Second, Rubin said there is a need to "fill a gap" in today's international surveillance of countries' financial regulatory and supervisory system, just as the IMF now carries out surveillance of macroeconomic policies.
The third area Rubin wants addressed is finding incentives to help countries strengthen their own standards while making sure that creditors and investors are made to fully bear the consequences of their own actions.
Camdessus says the IMF approach will be to address key points of the global system's architecture -- the role of the fund and other international institutions in strengthening national systems, how to put more teeth into IMF recommendations, and better defining the fund's role in managing crises when they arise.
In addition, Camdessus says the committee will look at improving transparency, including making sure that national data is timely and made public as quickly and widely as possible, and lastly, how to involve the private sector in crisis resolution.
To underline this review, Camdessus says the Interim Committee is ready to adopt a new global code of conduct on fiscal transparency -- new international standards to guide governments and institutions on the proper processes to follow in opening financial institutions to full public scrutiny.