Economic Report President

complement the role of official finance. The G-7 has called for similarwork as part of the next steps identified in its October 30 Declaration.The size, sophistication, and heterogeneity of recent international capitalflows have reduced the relevance of the procedures used in thepast when the private sector was involved in the resolution of severeinternational financial crises. These procedures were developed duringan era when a small number of large international banks were thesource of most capital flows to emerging markets. There is now a needto develop innovative ways for holders of new financial instruments toparticipate constructively in crisis containment and resolution. Also,innovative financing techniques, such as prenegotiated contingentlines of credit and financial provisions that provide greater explicitsharing of risk between creditors and debtors, are two avenues, amongothers, worthy of exploration.STRENGTHENING THE IMFWith the IMF’s resources recently augmented, the institution’smembers need to be sure that its policies effectively address the newchallenges of the global economy, and to provide the necessary politicaloversight and guidance to accomplish this objective. An enhanced IMFfacility to provide a contingent line of credit, as discussed above, wouldconstitute a significant adaptation and strengthening of the IMF’spolicies for crisis prevention and resolution to reflect the evolution ofthe global economy. Another area where policies could be strengthenedis in the concerted use of periodic reviews of members’ economies, topromote greater transparency of policies and compliance with standardsor other expressions of best practice in areas relevant to theeffective conduct of economic policy. One aspect of transparency of particularimportance concerns encouraging the publication, by thosecountries that rely on global capital markets, of key economic data asset forth in the Special Data Dissemination Standard, which has beenin effect on a voluntary basis since 1996. The IMF’s own transparencycould also be further improved by such steps as more widespread publicrelease of information on the policy deliberations of the IMF’s ExecutiveBoard. This could be accomplished along the lines of the proceduresfor the IMF’s periodic reviews, mentioned above, whereby thecountry under review may assent to a press release. In all these areas,the IMF will need to ensure that its work continues, as warranted, tobe closely coordinated with other international entities, such as theWorld Bank.It will also be important to ensure that the IMF’s Interim Committee,as the body designed to provide ministerial-level guidance to thework of the IMF on a regular basis, is able to continue to provide effectivepolitical-level oversight and direction of the IMF in a manner thatreflects the evolving nature of the challenges of the internationalfinancial system. Consideration of proposals to achieve this objective286