assessments". Second, it will "better integrate" existing risk assessments in order to "foster an integrated policy response to risks". Third, it aims to achieve better "early diagnosis" of risks by engaging "more actively with stakeholders". The board's adoption of the strategy noted that, in regard to capital flow management, "directors underscored the need to respect the members' right to adopt measures they deem appropriate". Persistant global imbalances In early July the Fund published two new reports under the rubric of multilateral surveillance, the 2012 Spillover report and a Pilot external sector report . The Spillover report "examines the external effects of domestic policies in five systemic economies, comprising China, the euro area, Japan, the United Kingdom, and the United States" and is in its second year (see Update 78). It focusses on the perceived risks by officials in other large economies from these five systemically important economies, including: euro area stresses, US fiscal policy, US monetary policy, Chinese growth and rebalancing, Japanese fiscal risks, and financial reform. The External sector report uses a new analytical model called an external balance assessment, and focuses on 'global imbalances', to "provide a snapshot of multilaterally consistent analysis of the external positions of major world economies", covering 27 individual countries as well as the eurozone. It defines any imbalance not "consistent with fundamentals and desirable policies" as a "distortion", providing IMF staff scope to define what is desirable and what is a distortion, regardless of country preferences. Annina Kaltenbrunner of the University of Leeds