•  Modern regulation and supervision of the financial sector, so as to ensure efficient financial intermediation and manageable risk levels. •  Openness to foreign trade in goods and services and to financial flows, in order to improve domestic efficiency and to reap the benefits of globalization. •  Quality and transparency of macroeconomic and financial information by adopting international standards and codes of best practices. This improves the effectiveness of policies by allowing markets to internalize changes in a more orderly and gradual way. At the same time, it establishes a framework for a greater responsibility and creates incentives for a better design of policies. Achieving macroeconomic stability together with trade and financial integration pose important challenges for the countries’ institutional and policy frameworks, at both the domestic and the global level. Therefore, progress in these fronts must be simultaneous, and at a pace that countries feel  BIS Review 2/2007  1  comfortable with, because otherwise, economic integration may increase exposure to external shocks and local vulnerabilities, while macroeconomic instability, in turn, could hinder integration. The long-lasting weakness and volatility of growth rates of the region have made it difficult for governments to reduce poverty significantly and the endemic inequality in income distribution. In the current positive cycle of booming commodity prices, governments face the difficult tradeoff between continuing to bring down public debt vis-à-vis facing social pressures for increased spending. All this maintaining macroeconomic stability. Balancing these objectives requires having in place very flexible budget processes, and tax and spending structures.

One of the main levers for action is to increase the supply of safe eurodenominated assets. The launch in 2021 of the Next Generation EU (NGEU) programme will raise EUR 800 billion. Above all, the unified approach to  Page 5 sur 6 financing EU borrowing, which was introduced by the Commission in 2023, means that bonds xii can be issued under the single name of "EU bonds", which has the advantage of avoiding fragmentation and boosting the liquidity of issues. But I believe we need to go further, by aiming to bring together the bond issues of the Commission, the European Stability Mechanism (ESM) and maybe the European Investment Bank: the total pool would then amount to EUR 1,100 billion. We also need to speed up the implementation of the Capital Markets Union (CMU), which is crucial for ensuring a better allocation of capital within the euro area: this internal integration priority also serves the euro's external role. These first, realistic steps are the only advances within our reach at this stage. They should not divert our attention from the "creative frontier" xiii that a truly multilateral financial system would represent. The ultimate goal remains to lead the IMF to become a more universal, accessible and agile lender of last resort. This would require adjusting the IMF's role and financial capacity in the global financial safety net, to better reflect the new global economic balances and prevent some under-represented countries from taking or pursuing more unilateral routes.