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Reforming the international financial architecture: consensus and divergence

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  • Ocampo, José Antonio
Abstract
This paper reviews the current controversy on the reform of the international financial architecture. The paper first identifies some basic assumptions that must be taken into account in any meaningful reform. Then it identifies basic areas of consensus among different analysts: the need to maintain expansionary policies in industrialized countries as long as the current uncertainty prevails; to develop adequate contingency financing for countries in difficulties; to improve the institutional framework in which financial markets operate; to create appropriate mechanisms to internalize the externalities generated by national macroeconomic polities; and to design internationally sanctioned standstill provisions to ensure appropriate sharing of the burdens of adjustment. Next, it identifies certain areas of divergence and presents some proposals to overcome them: the need to use SDRs more actively as a financing mechanism during crises; to reach agreements on the coverage of IMF conditionality, restricting it to the macroeconomic policies that were its purview in the past; to preserve the autonomy of developing countries to manage the capital account; to maintain the freedom of countries to choose the exchange rate regime; and to strengthen regional institutions. It ends with a brief look at some complementary issues associated with the prevention and management of financial crises, which is the main focus of the paper.

Suggested Citation

  • Ocampo, José Antonio, 1999. "Reforming the international financial architecture: consensus and divergence," Series Históricas 7459, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    • Handle: RePEc:ecr:col048:7459
    Note: Includes bibliography
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    File URL: http://repositorio.cepal.org/handle/11362/7459
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    References listed on IDEAS

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    5. Stiglitz, Joseph E & Weiss, Andrew, 1981. "Credit Rationing in Markets with Imperfect Information," American Economic Review, American Economic Association, vol. 71(3), pages 393-410, June.
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    1. Hubert Escaith & Christian Ghymers & Rogerio Studart, 2005. "Regional Integration and the Issue of Choosing an Appropriate Exchange Rate Regime in Latin America," Chapters, in: Patrick Artus & André Cartapanis & Florence Legros (ed.), Regional Currency Areas in Financial Globalization, chapter 8, Edward Elgar Publishing.
    2. José Antonio Ocampo, 2000. "Recasting the International Financial Agenda," SCEPA working paper series. 2000-18, Schwartz Center for Economic Policy Analysis (SCEPA), The New School.
    3. Ocampo, José Antonio, 1999. "International financial reform: the broad agenda," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), December.
    4. Machinea, José Luis & Rozenwurcel, Guillermo, 2005. "Macroeconomic coordination in Latin America: does it have a future?," Series Históricas 7858, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    5. Griffith-Jones, Stephany, 2001. "An international financial architecture for crisis prevention," Copublicaciones, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), number 1705.
    6. Ros, Jaime, 2001. "From the capital surge to the financial crisis and beyond: the Mexican economy in the 1990s," Copublicaciones, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), number 1703.
    7. Rogério Studart, 2006. "Integrating Uneven Partners: The Destabilizing Effects of Financial Liberalization and Internationalization of Latin American Economics," Chapters, in: Matías Vernengo (ed.), Monetary Integration and Dollarization, chapter 9, Edward Elgar Publishing.
    8. Escaith, Hubert, 2001. "Les petites économies d'Amérique Latine et des Caraïbes: croissance, ouverture commerciale et relations inter-régionales," Series Históricas 7775, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    9. Agosin, Manuel R., 2001. "Korea and Taiwan in the financial crisis," Copublicaciones, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), number 1701.
    10. Cartapanis A. & Herland M., 2001. "Systemic Risk and New International Financial Architecture: Reconciling KEYNES and Neo-Liberalism?," European Research Studies Journal, European Research Studies Journal, vol. 0(1-2), pages 5-26, January -.
    11. -, 2001. "Financial crises in "successful" emerging economies," Copublicaciones, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), number 1699 edited by Brookings Institution Press.
    12. Heymann, Daniel & Ramos, Adrián, 2005. "MERCOSUR in transition: macroeconomic perspectives," Documentos de Proyectos 3910, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    13. Heymann, Daniel, 2000. "Major macroeconomic disturbances, expectations and policy responses," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), April.
    14. Ffrench-Davis, Ricardo & Tapia, Heriberto, 2001. "Three varieties of capital surge management in Chile," Copublicaciones, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), number 1702.
    15. Goyal, Ashima, 2002. "Reform proposals from developing Asia: finding a win-win strategy," MPRA Paper 30527, University Library of Munich, Germany.
    16. Ffrench-Davis, Ricardo & Ocampo, José Antonio, 2001. "The globalization of financial volatility: challenges for emerging economies," Copublicaciones, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), number 1700.

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