Also, although we believe that the Fund should be more explicit about the reasons why its recommendations may not deliver the expected outcomes, we note that this should not be interpreted as, nor convey the message that, the Fund’s recommendations are always correct or that member countries’ authorities always take a defensive attitude. We believe deeply in a policy dialogue process that could be beneficial to both parts. At the end, successful policies are those implemented by economic authorities that feel them their own and are capable to create the political framework for their execution. We also support a more systematic focus of the Fund’s surveillance on regional developments by detecting regional trends and fostering dialogue with region-wide institutions such as ECLAC. Along  2  BIS Review 2/2007  these lines, we appreciate the Fund’s regional outlook report, whose last issue was simultaneously launched in Mexico City and Santiago in early November. As a Central Bank fully committed to an inflation-targeting framework, we place substantial weight on making continuous efforts in strengthening transparency. In this direction, we think that the Fund’s communication strategy would be more effective if analysis goes beyond the mere publication of reports, making it an integral part of the public debate on policies and economic reforms. Considering the importance of communications, we believe that enhancing the Fund’s outreach activities both at global and regional level will strengthen the effectiveness of the Fund’s monitoring and surveillance.

The risks the world economy faces in the medium term - associated to an abrupt resolution of global imbalances, a commodity price downturn, a slowdown of global growth, or an abrupt shift in risk perception and valuation by global investors - require that the agenda on international financial architecture be focused more on preventing, rather than resolving crises ex post. As countries are progressively more integrated into a more global financial system, new challenges emerge for economic authorities. The increased mobility of international capital flows - beyond their potential benefits - entails the risks of sudden and unexpected reversal of capital flows that could be further worsened by the contagion associated to the financial market reaction. Also, in the current market-driven international environment, characterized by increasing access of emerging economies to private funding, and by a more complex international financial system, externalities, market failures and perverse incentive effects are still in place and impede private financial flows to become a permanent and stable source of financing. Therefore, strengthening countries’ resilience is not only about developing and improving appropriate and consistent policies and institutions, but also about providing countries with access to emergency liquidity and the possibility to obtain short-term liquidity by private financial instruments. The Fund should therefore play a leading role in facilitating the development of more complete global financial markets, which will ultimately help emerging economies to protect themselves against external reversals while complementing authorities’ efforts in building up a sound policy framework.