The Basle capital accord, for example, is evolving even as we speak and will surely have to evolve further before long, even if a new version is agreed on soon. If codes and standards are to be relevant and effective, they will have to be issued in serial versions every couple of years. The monetary and financial policy code currently being prepared by the IMF at the behest of the G-7 is a case in point. It will not be an effective tool for improving the process of setting monetary and financial market policy around the world unless it is subjected to a lengthy and inclusive process of consultation. This process must involve central bankers and financial market regulators from emerging markets as well as industrial countries.
Ideas here abound, none without some difficulties.
The IMF could make adherence to the various financial codes an important part of its Article IV surveillance process. This would take considerable effort and resources. Assembling teams with the skills to evaluate compliance with the codes and interpreting the results would not be easy and is not obviously something for which the IMF is best suited. This could involve teams of various types of financial market regulators and even regulatees from various industrial and emerging market countries evaluating the strength of another country's banking and financial system or its compliance with the relevant codes. One version of this idea would have the peer groups act as accreditation teams, much as U.S. universities or hospitals are reviewed and accredited by teams of their peers.