The international presumption in favour of free markets in itself is somewhat remarkable, given that, at the micro-economic level, increased competition invariably constitutes a threat to established producers – and their employees – who might well be tempted to urge protection in one form or another on their national governments. Consumers, who benefit from such competition, tend to be less vocal or well organised. The threat of protectionism is never, therefore, far away. But in fact the presumption in favour of competition has proved encouragingly robust. And that is not just in relation to international trade. There is a parallel presumption in favour of freedom of capital movements, and much greater openness around the world to foreign investment. Among other things on the supply-side, there is a shared emphasis on the need to direct public spending to developing human resources through education and training, to effective health care, and affordable social safety nets. There has been a global trend to privatisation through which governments have increasingly returned essentially commercial activities, in which they have no necessary comparative advantage, to market disciplines. And there is a common recognition of the need for reforms in labour and product markets designed to reduce distortions which impede the efficient allocation of resources. Now I do not pretend to you, Mr Chairman, that the international policy consensus in favour of macroeconomic stability and supply-side reform is fully articulated, particularly on the supply side; nor do I claim that it is subscribed to in its detail equally in every IMF member country.

It goes without saying that macro-economic stability is our first line of defence. But, beyond that, a huge amount of work has been undertaken in a variety of international fora to develop codes and standards of best practice in a whole range of more specific areas relevant to improving the functioning of the international financial system. The IMF has produced codes of good practice on data dissemination, on transparency of monetary, financial and fiscal policies, and guidelines for public debt and reserves management. The main Basel Committee has put forward proposals for revising its capital accord designed to align regulatory capital requirements more closely with economic capital and has drawn up core principles for effective banking supervision. The Basel Committee on Payments and Settlement Systems has developed core principles for systemically important payments systems. The International Organisation of Securities Commissions has developed objectives and principles for securities regulation; the International Association of Insurance Supervisors have developed insurance core principles; and the OECD a set of principles on corporate governance. The International Accounting Standards Committee has developed international accounting standards; and the International Federation of Accountants international standards on auditing and audit practice and so the list goes on. The emphasis now has to be on implementation by national authorities with the help where necessary of the international community. And there needs to be increasing emphasis, too, on transparency and validation of progress towards implementation in individual countries in the context of IMF surveillance.