2011 Triennial Surveillance Review And Review Of The 2007 Decision Concept

Over the past three years, the IMF has worked to assist members in addressing the repercussions of the global financial crisis while also tackling gaps in its surveillance framework that the crisis laid bare. This reform agenda has drawn extensively from the recommendations of the 2008 Triennial Surveillance Review (TSR), as well as subsequent IMF and IEO reviews of the Fund's performance in the run-up to the crisis. This TSR provides an opportunity to take stock of the steps taken and to assess recent experience with surveillance.

This paper reviews the 2007 Surveillance Decision and the broader legal framework for surveillance. While the 2007 Surveillance Decision on Bilateral Surveillance over Members’ Policies (thereafter, the 2007 Decision) requires the Fund to review the decision itself, this paper takes a broader view. It recognizes that the 2007 Decision cannot be assessed in isolation from the legal framework it derives from, i.e., the Articles of Agreement, and that a debate on the adequacy of this broader framework is also necessary. The paper therefore discusses the strengths and limitations of the current system as set out in both the Articles of Agreement (primarily, Article IV) and the 2007 Decision and explores options going forward.

External study prepared by John Palmer, Chair, Toronto Leadership Centre, former Superintendent, Office of the Superintendent of Financial Institutions, Canada, former Deputy Managing Director Monetary Authority of Singapore, former Canadian Managing Partner of KPMG and Yoke Wang Tok, Former Senior Advisor to the IMF Executive Director representing ASEAN, Nepal, Fiji and Tonga and former Principal Economist, Monetary Authority of Singapore: This report aims to provide an independent view of how the Fund is discharging its multilateral surveillance responsibilities, in particular its contribution to global financial stability and crisis prevention, working in coordination with other relevant international groupings/institutions such as the FSB and BIS. As we emerge from the global financial crisis (GFC), the Fund has regained much of its credibility and relevance. The GFC caught many, including the IMF, by surprise. Since then, the Fund has done considerable self-analysis and taken active steps to strengthen its surveillance and policy advice and to improve traction with policy makers. The IEO report on the Fund’s performance in the run-up to the financial and economic crisis identified various shortcomings that needed to be addressed. One of its key findings was the inability of the Fund to connect-the dots, to deliver hard-hitting messages and the difficulty experienced by the Fund in thinking beyond mainstream/official views. Many of the IEO’s findings have relevance to this review.

External Study prepared by Jean Pisani-Ferry, André Sapir, and Guntram B. Wolff: This report provides an independent evaluation of recent IMF surveillance in the euro area (EA). It focuses on the euro area as a whole and on four countries severely hit by the recent economic and financial crisis, namely Greece, Ireland, Portugal and Spain.

Monetary sovereignty is a crucial legal concept dictating that states have sovereignty over their own monetary, financial, and fiscal affairs. However, it does not feature as part of any key instruments of international law, including the Articles of Agreement of the International Monetary Fund. Rather, it has remained a somewhat separate notion, developed under contemporary international law from an assertion of the former Permanent Court of International Justice in 1929. As a consequence of globalization and increasing financial integration and a worldwide trend towards the creation of economic and monetary unions, the principle of monetary sovereignty has undergone significant change. This book examines this evolution in detail, and provides a conceptual framework to demonstrate what this means for the legal and economic challenges faced by the international community. The book examines the historic origins and evolution of the concept of monetary sovereignty, putting it into the context of broader concepts of sovereignty. It argues that monetary sovereignty remains relevant as a dynamic legal concept with both positive and normative components. It investigates the continuing hybridization of international monetary law resulting from changes to its formal and material sources. It then examines the complex phenomenon of exchange rate misalignment under international monetary and trade law, and the increasing regionalization of monetary sovereignty, notably in light of the European sovereign debt crisis. Finally, it assesses the role the concept of monetary sovereignty can play in the reorganization of international finance following the recent global financial crisis.

This paper surveys that state of fiscal transparency in the wake of the current crisis and looks at what can be done to improve it. It examines the relationship between fiscal transparency and fiscal outcomes; reviews progress in promoting greater fiscal transparency over the past decade; considers the lessons of the recent crisis for existing fiscal transparency standards, practices, and monitoring arrangements; and makes a series of recommendations for renewing the global fiscal transparency effort in the wake of the crisis.

In 2014, the global economic system celebrates two anniversaries: Seventy years ago, on 22 July 1944 at Bretton Woods, New Hampshire, the Articles of Agreement of the International Monetary Fund (IMF) and the Articles of Agreement of the International Bank for Reconstruction and Development (Worldbank) were adopted. Since then the global financial and monetary system underwent significant policy changes, but the institutional framework remained the same. More recently, twenty years ago, on 15 April 1994, the Final Act of the Uruguay Round of Multilateral Trade Negotiations was signed and its key component, the Agreement establishing the World Trade Organization, entered into force on 1 January 1995. Even though the beginning of the multilateral trading system dates back to the late 1940s, the founding of the WTO constitutes a significant institutional reform which marks the beginning of a new era. Anniversaries are usually moments of celebration. However, even a superficial observer will notice that neither the current international financial and monetary regime nor the international trade regime is in a stage which invites celebration. Instead, both are facing difficult and fundamental challenges to their very existence from the outside but also from within. So while there may be no time to celebrate, anniversaries are also often used for reflection about the past and the future. Hence, EYIEL 5 (2014) considers these two anniversaries ample moments to reflect on the legacy and the current status of the main two pillars of International Economic Law in its Part one. Part two of EYIEL 5 (2014) brings together contributions on the EU’s Deep Trade Agenda, on Current Approaches to the International Investment Regime in South America, on the Multilayered System of Regional Economic Integration in West Africa and on the Tripartite Free Trade Area, as well as on India and her Trade Agreements. Part three contains treatises of developments in the World Customs Organization, the World Intellectual Property Organization and in International Investment Law. After the book reviews in Part four, EYIEL 5 (2014) is complemented with an Annex containing the Case (on exchange-rate manipulation and crisis-caused guarantees to financial institutions) and the Best Submissions of the 11th EMC2 ELSA WTO Moot Court Competition (of the Harvard team for the complainant and the Leuven team for the respondent). The case not only addresses issues of current interest but also links the subjects of our two special focusses nicely together.

This paper assesses progress in strengthening Fund surveillance and identifies needed improvements. It differs from past reviews insofar as it: (A) encompasses not only bilateral but also multilateral surveillance; and (B) steps-up external inputs in the form of studies by outside observers, commentaries, and assessment of recommendations by an external advisory group.