At the time of IMF’s establishment, our economic policy advice focused mainly on helping members to shape sound macroeconomic and financial policies, within the disciplines of the Bretton Woods system of fixed exchange rates. The breakdown of that system in the early 1970s, and the resultant Second Amendment of the IMF’s Articles of Agreement, led to a re-orientation of the IMF’s functions. In particular, the revision of Article IV, and the introduction of the surveillance process, explicitly recognized the close relationship between domestic economic policies and international stability. To this day, this forms the basis for our systematic and comprehensive review of economic conditions and policies in each member country. Similarly, the wave of de-colonization that swept the world from the 1950s onwards placed new and complex responsibilities on the Fund. The IMF quickly found that countries looked to it for advice and assistance beyond the traditional macroeconomic areas of fiscal policy, monetary policy, and exchange rate systems. In addition to these subjects, IMF advice and assistance were also sought on establishing the institutions of monetary and fiscal policy, and on supply-side structural policies to help promote sustained growth. In the last fifteen years, following the end of the Cold War, new challenges were created in this regard by the transition of former centrally-planned economies to market-based systems. Through our work in these areas, it also became increasingly clear that structural and institutional issues were important for stability and growth in other member countries too, including the major industrial economies.

As we ponder how best to meet the challenges of the future, there appears a strong case that the IMF should remain anchored to its core macroeconomic and financial areas of mandate and expertise. The Fund’s governing organs – including our Executive Board and the International Monetary and Financial Committee (IMFC) – are already actively engaged in this review. They have had various occasions to consider this matter, and I would like to use this opportunity to present some of the key ideas that have emerged in discussion, in the following five areas: surveillance, financial sector and capital markets work, Fund financing and lending, our assistance to low-income countries, and internal management and governance. First, on surveillance, both the IMF’s Executive Board and the IMFC share my vision that a central task of the Fund lies in a stronger and better-focused surveillance process. IMF surveillance provides the foundation for cooperation among our members in the promotion of stability and growth in the global economy. With increased trade and financial linkages among nations, and strong connections between economic performance, poverty, and security issues, such cooperation to address shared problems is now more important than ever. For instance, the IMF has repeatedly pointed to the need to address current global imbalances, so as to reinforce the basis for more balanced and sustainable global growth. The existing relatively benign global outlook provides an excellent window of opportunity to do that, and the IMF serves as a ready vehicle through which to cooperate on the necessary actions.