The 2010 IMF quota and governance reforms are a significant development as they give greater voice to EM countries on governing the IMF policies and procedures. This development together with increasing awareness of sufficient global safety nets would strengthen IMF recourses and reduce their stigma effect. Again, there is a symmetry issue in the provision of liquidity during financial stress times – whether there should be internationally designed mechanisms enforcing countries that supplied excessive liquidity in the first place also to provide liquidity to all recipient countries during financial stress times such as through currency swap arrangements. The confidence function of the IMS highlights the fact that all stakeholders including financial markets have greatest confidence in the functioning, resources and governance of the system. Strengthening its recourses, improving its governance and advancing its functions will crucially bolster all stakeholders’ confidence in the system. What have been done recently along the lines of the 2010 IMF quota and governance reform, the inclusion of the renminbi in the SDR system and the recent increases in the IMF resources greatly improved confidence in the IMS. The adjustment mechanism of an IMS is mostly related to its sustainability but also affects its confidence function. The IMS requires a symmetric and fair adjustment mechanism. The G20 plays a central role in the adjustment mechanism of the IMS through fostering international policy coordination and cooperation. The IOs, especially the IMF, largely execute this G20 objective through bilateral surveillance and multilateral surveillance or oversight of the world economy.

We have to avoid shifting from a dollar-dominated system to a confrontational non-system with, for instance, a dollar world opposed to a renminbi world. We can all agree that such a fragmentation would generate instability, notably creating the risk of runs from one currency to another. iii Competitive currency devaluations between the two world wars created such instability, when the dollar and the pound were competing for leadership. Fragmentation might also lead to the development of separated payment systems with limited interoperability. And it could harm the GFSN (as reserves could be less convertible) with, consequently, a misallocation of capital. Another current concern is China’s reluctance to join the international community cooperative debt treatment process, the Common Framework. Finally, we all hope that the sanctions and other measures taken in an emergency situation will be withdrawn after a peaceful settlement of the geopolitical situation. In addition to this public – or geopolitical – fragmentation, there is a risk of “private” fragmentation through the disorderly development of crypto-assets, among which the somewhat misnamed “stablecoins”. As demonstrated by the turmoil on financial markets in recent weeks, they are possibly very unstable. We have long stressed the risks of such speculative investments. But it’s not enough: this must be taken as a powerful wake-up-call for a global regulation, which is urgently needed. MiCA on the European side paves the right way. Crypto assets could disrupt the International Financial System if they are not regulated, overseen and interoperable in a consistent and appropriate manner across jurisdictions.