The treaty creating the Fund made clear that its founding purpose was "to promote international monetary co-operation through a permanent institution which provides the machinery for consultation and collaboration on international monetary problems”. In reality, though, the Fund is not playing that role at present. Its surveillance lacks focus. Its lack of day-to-day independence hampers its ability to comment effectively on divergences between stated objectives and actual policies at the national level. And it lacks the legitimacy to be an effective secretariat. Despite strenuous efforts by its Chairman, Chancellor of the Exchequer Gordon Brown, to promote discussion, there is little genuine interaction between members of the IMFC (or the Interim Committee as it was) about the international monetary system. I welcome the Managing Director’s recent statement that he intends to examine Fund surveillance. One symptom of the Fund’s decreasing effectiveness has been the proliferation of "G" groups – the G -5 that became the G-7, the G-22 that became the G-33 and then the G-20; the G-10; the G-24 and the G-77. All of these were attempts to create opportunities for serious discussions among countries in the international monetary system. But as the world economy, and hence the relevant issues, have  BIS Review 11/2006  5  changed so it has been necessary to set up new “G” groups. Such groups are perceived as exclusive and lack legitimacy, and their meetings have increasingly become communiqué-driven events. In February 2004, the G-7 met in Boca Raton in Florida.

And third, the expansion of that work into the current international effort to develop and implement a single global code of conduct for the foreign exchange market and to enhance adherence to that code among all market participants. Work of the Financial Stability Board’s Foreign Exchange Benchmarks Group (FXBG) Given the global nature of the FX market, as well as the number of jurisdictions in which wrongdoing has been uncovered, efforts to strengthen the market must be global in nature as well. Recognizing this imperative, the Financial Stability Board (FSB), an international body that monitors and makes recommendations about the global financial system, established the Foreign Exchange Benchmarks Group (FXBG) in early 2014. The purpose of the FXBG was to review FX benchmarks and associated market practices, including potential misaligned incentives, and make recommendations for change. The FXBG, which consisted of representatives from more than twenty countries, engaged with a range of market participants to analyze the market structures and incentives as they related to trading around benchmark fixings. The group produced a series of recommendations to enhance the structures and behaviors around FX benchmark trading. I would like to focus on two particular aspects of these recommendations – first, changes to the WM/Reuters calculation 10 and second, changes aimed at strengthening market conduct. The FXBG report highlighted the dominant use of the WM/Reuters (WMR) 4 p.m. London fixings by many different sets of market participants, including some not otherwise active in the foreign exchange market.