In 1995, the peso crisis struck Mexico, and Latin America seemed to teeter on the brink of economic collapse. A few years later, some of Asia's leading economies faced similar disaster. Then, in 1998, came the Russian default -- and with it, fear that the contagion would spread, and economy after economy would fall ill and roll over dead. Doomsayers talked of a global depression of a sort not seen since the 1930s.
Today, the 1990s are remembered as an era of unprecedented growth and creativity. But at the time -- as I know from my experience then as Canada's finance minister -- that growth did not seem nearly so certain. So what changed? How did we get from there to here, from a series of major economic crises to a period of relative economic calm?
Crises have their uses. They can crystallize a moment and bring into sharp relief the mistakes that have been made and what must be done to correct them. Over the last 50 years, the international community has been remarkably successful at learning these lessons and putting in place international measures that have resolved crises and brought greater prosperity, security, health, and social well-being to the world than our grandparents could have imagined.
The economic crises of the 1990s required solutions for problems specific to each of the countries involved. As governments worked through them, however, a more general problem arose that raised serious questions about the overall approach to global economic issues. Put simply, the right countries were not sitting down around the same table at the same time.
Without a proper leadership forum, finance ministers from the group of highly industrialized countries (G-7) took the lead throughout the 1990s in formulating responses to the various crises. But this group was too restricted, and unable to help set the direction for sound financial management that emerging economic powerhouses of the developing world should follow.
The International Monetary Fund (IMF) played a central role in mounting rescue operations but
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