Home › Features › Essays › The Future of the International Financial Architecture

The Future of the International Financial Architecture

Peter G. Peterson and Carla A. Hills
November/December 1999
Summary -- 

The global financial turmoil that began in Thailand in 1997 has forced the international community to reevaluate the institutions, structures, and policies aimed at crisis prevention and resolution. In September 1998 President Clinton suggested that a distinguished private-sector group assess the need for reform of the international financial architecture. With this concern in mind, the Council on Foreign Relations sponsored the Independent Task Force on the Future of the International Financial Architecture, cochaired by Peter G. Peterson, chairman of both the Council and the Blackstone Group and secretary of commerce during the Nixon administration, and Carla A. Hills, CEO of Hills & Co. and U.S. Trade Representative during the Bush administration.

Login or Register to leave a comment.

THE FUTURE OF THE INTERNATIONAL FINANCIAL ARCHITECTURE

A Council on Foreign Relations Task Force

The global financial turmoil that began in Thailand in 1997 has forced the international community to reevaluate the institutions, structures, and policies aimed at crisis prevention and resolution. In September 1998 President Clinton suggested that a distinguished private-sector group assess the need for reform of the international financial architecture. With this concern in mind, the Council on Foreign Relations sponsored the Independent Task Force on the Future of the International Financial Architecture, cochaired by Peter G. Peterson, chairman of both the Council and the Blackstone Group and secretary of commerce during the Nixon administration, and Carla A. Hills, CEO of Hills & Co. and U.S. Trade Representative during the Bush administration.

Morris Goldstein, former deputy director of research at the International Monetary Fund and now a senior fellow at the Institute for International Economics, served as project director and author of the report. Task force members are listed on page 171.

The following is an edited executive summary of the task force report. A full-length version of the report and dissents can be found on the Council on Foreign Relations Web site, at www.cfr.org.

This is a premium article

You must be a Foreign Affairs subscriber to continue reading. If you are already a print subscriber, click here to activate your online access.

Related

Essay, Mar/Apr 1998
Refocusing the IMF
Martin Feldstein

Initially devised to maintain a system of fixed exchange rates, the IMF took on a new role during the Latin American debt crisis of the 1980s-providing moderate amounts of credit, facilitating debt renegotiations, and recommending responsible macroeconomic policies. But the IMF is also applying the lessons of Eastern Europe and the former Soviet Union, where a fundamental economic restructuring was necessary, to Asia. So in Korea, for example, the fund called for reform of inefficient conglomerates and inflexible labor laws. However beneficial in the long run, such changes are not needed to resolve the current crisis. By stepping in too far and too soon, the IMF discourages countries from seeking modest help. Even worse, it encourages bankers to undertake more risky loans, making another crisis more likely.

Read
Response, May/June 2009
Comparing Crises
Robert Madsen; Richard Katz

Does the current financial crisis resemble Japan's "lost decade" of the 1990s? It may be even worse, argues Robert Madsen. Not so, replies Richard Katz.

Read
Essay, May/Jun 1995
Why the IMF Needs Reform
Zanny Minton-Beddoes

Since its creation, the IMF has seen its global mission overcome by floating exchange rates and immense private capital markets. Consequently, it has focused more on the developing world, become more politicized, and wandered into riskier endeavors such as Mexico's bailout. Nevertheless, the IMF can and should be reformed to become a global rating agency, a bankruptcy judge for nations, and an international catalyst for aid and financial packages.

Read
Cover image

In the Magazine

November/December 2009 / 6, 88
Essay
In the Quicksands of Somalia
Bronwyn Bruton

Washington's repeated attempts to bring peace to Somalia with state-building initiatives have failed, even backfired. It should renounce political intervention and encourage local development without trying to improve governance.
Read