we fail, the influence of the institutions will diminish further, possibly irreparably. reform of imf surveillance and voting rights of member countries complement each other. voting rights are an area where hard work and many hours of persuasion will be needed if countries are to be convinced to see the bigger picture and relinquish some degree of direct control over the imf in return for the creation of a more effective institution. hard work, perseverance and dogged determination have been characteristics of this year ’ s australian presidency of the g20 under peter costello, ian macfarlane and glenn stevens. their efforts have been crucial to the progress that has been made towards quota reform over the past year. it is important that the australian legacy be carried forward if the process of quota reform is to be completed. ( e ) are there overlaps with other institutions? unnecessary duplication is a waste of both time and money. i have already spoken about the respective comparative advantages of the imf and oecd. there has also been some discussion about the roles of the imf and the g7 in respect of exchange rate issues. over the past three years – especially since the boca raton g7 summit of february 2004 – the inability of the g7 to deal with the major spillover effects in the world economy has become more and more evident. adding new members, even if they were willing to join, is not the answer. more productive would be to use the imf as flexible forum to bring the relevant group of countries together to handle issues as and when they arise. 5. conclusions the meetings of the imf in washington and singapore this year marked the beginning of an attempt to define more clearly the role of the fund in the world economy. whether that will prove successful is too early to tell. but the challenge is clear. globalisation increases our dependence on each other. it is no longer sufficient to rely on the commitments made sixty years ago – the world has changed too much since then. it is up to the member countries to make a multilateral trading system work. as joseph conrad wrote a century ago in his great novel nostromo, “ action is consolatory. it is the enemy of thought and the friend of flattering illusions ”. the frenetic activity of international meetings and the flattering illusions of a stream of communiques do not add up to a coherent set of commitments. failure to reform the international institutions will condemn them to irreleva

debentures shall be made by the government or by any agency or institution referred to in subsection ( 1 ) of section 106, whether in pursuance of authority conferred by any written law or otherwise, unless the advice of the monetary board has first been obtained upon the monetary implication of the proposed loan or issue. ” bis central bankers ’ speeches the exter report elaborates the thinking behind these sections : “ in a small country like ceylon, it is clearly advantageous to place the responsibility for co - ordinating the activities of all government credit institutions in the monetary board of the central bank. the board determines monetary and credit policy in general, and should have some means of ensuring that the policies of other credit institutions conform. ” he further clarifies : “ the board should be able to co - ordinate both the borrowing and the lending and investment operations of such institutions. with respect to borrowing, co - ordination is necessary in order to prevent separate government agencies from competing with each other and ‘ spoiling ’ the market, especially in the early stages of its development, and to make possible the formulation of a properly diversified pattern of interest rates and maturities for the entire government borrowing program. ” those sections of the mla that i referred to, and the relevant annotations in exter ’ s report, strongly suggest that the central bank should play a dynamic role in the formulation of fiscal policy, particularly in relation to a significant part of fiscal policy ’ s sphere of influence, namely that of borrowing and lending. in that context, it may be safely argued that, whilst the overwhelming responsibility for monetary policy has to be assumed by the central bank, a sizeable part of the responsibility in relation to fiscal policy is also cast upon the central bank. fourth : exter explains the unique position of the governor, and the need for the governor to be independent. this position is assured by the fact that the governor is appointed for a 6 year term and cannot be removed from office, unless he has done any act, which in the opinion of the governor general, ( now, the president ), is of a fraudulent or illegal character, or is against the interest of the central bank. fifth : exter discusses the limitations of the central bank : once again, let me quote : “ a central bank influences the economic life of a nation principally by monetary action. while such action can be tremendously effective under certain conditions, its limitations should be frankly recognized. thus, through its control