Such an integrated, risk-focused approach should aim to inform timely policy interventions and limit contagion. In this context, we welcome both the spillover reports and the Consolidated Multilateral Surveillance Report presented at this meeting as steps in the right direction to understand and act on the implications of increasing interconnectedness among members. In addition, the Fund needs to have a broader, more balanced surveillance mandate that better reflects the major areas of risks confronting the global economy, including risks in sovereign balance sheets and the financial system. We call on the Fund to adopt a new Integrated Surveillance Decision that replaces the 2007 Decision, which focused too narrowly on exchange rates. International monetary system We encourage the Fund to continue its work to strengthen the international monetary system. The experience of countries in our constituency attests to the complex policy challenges posed to emerging market economies by volatile capital flows. We expect the Fund’s work in this area to continue to be even-handed, non-prescriptive and to take into account country specificities. Further, we look forward to the extension of staff analysis of capital flows and associated policies to cover both source and recipient countries. We also support the Fund’s work on examining the case for broadening the SDR basket. This could contribute towards the diversification of reserve holdings, thereby strengthening the stability of the international monetary system over the longer term. Governance reform Governance underpins the legitimacy and traction of the Fund’s activities and advice.

Rapid liquidity support at an early stage is critical to help pre-empting temporary liquidity difficulties in sound economies from escalating into a wider crisis. We call on the Fund to review its lending toolkit and emphasise that potential solutions should minimise stigma, and  BIS central bankers’ speeches  1  send effective signals that differentiate crisis bystanders as fundamentally sound economies. A study of gaps and new solutions can be undertaken together with an early review of the Flexible Credit Line and Precautionary Credit Line. The latter should be aimed at improving the accessibility and flexibility of these instruments whilst limiting moral hazard. ii) Surveillance The Fund’s credentials on surveillance suffered a setback after it had not given sufficient warning in the run-up to the 2008/9 crisis. The 2011 Triennial Surveillance Review (TSR) is therefore a good opportunity for the Fund to address the shortcomings. On the whole, we welcome the key TSR objective of making the Fund’s surveillance as interconnected as the global economy itself. Given its universal membership, cross-country experience and deep technical expertise, the Fund is uniquely placed to identify global challenges and facilitate dialogue with country authorities to undertake appropriate policy responses. To leverage on this strength, the Fund needs to invest time to build stronger trust and consensus amongst members on its surveillance and analytical frameworks. The Fund is also well placed to integrate its macroeconomic and financial surveillance, and thus to identify latent vulnerabilities, interconnections and transmission channels.