s focus back to the original goals of its founders. with the size of capital and trade flows in today's global economy, we need - now more than ever - a fortified imf that is truly able to promote a well - functioning, marketbased international financial system. by " well - functioning, " i mean a financial system that is both efficient and stable, so that markets can do their job of allocating savings to investments through the pricing of capital, and of smoothing economic adjustments through movements in relative prices. how should the imf be reformed? well, to solve global problems, we need to have everyone represented at one table and all participants fully engaged. but since 1997, the work of the imf has suffered. over the past number of years, many emerging - market economies have shifted some of their attention away from the centre of the global financial system, towards regional initiatives. this trend must be reversed. the fastest - growing parts of the world economy should have a growing voice at the imf. at its recent meeting in singapore, the fund began the process of making itself appropriately representative of today's global economic reality. but the importance of this step will be lost unless we can improve the fund's effectiveness in promoting a framework that supports a well - functioning global economy. i believe the key to that improvement lies in a strengthened surveillance function. so, how exactly should surveillance be strengthened? in my view, the imf can play a pivotal role in mitigating serious global risks by serving, in the words of john maynard keynes, as a " ruthless truth teller. " this expression is a wonderful turn of phrase, not only for its colourful language, but because it neatly encapsulates the critical objectives of effective imf surveillance. the fund's surveillance should determine the " truth " about the economic policies and circumstances of member countries, and then " tell " or communicate this truth transparently to all members and to the international community at large. to determine the truth, the imf must be focused on the right surveillance priorities ; namely, the exchange rate, monetary, fiscal, and financial policies of member countries. surveillance should focus on these areas alone, and on the potential spillover effects that these policies may have on other members. these are the priorities that reflect the reality of an increasingly integrated global economy. this is not to say that there is one single prescription for macroeconomic and financial policies that all countries must rigorously follow. but what is important

mr thiessen reports on the future of the canadian financial sector, the economy and monetary policy remarks by mr gordon thiessen, governor of the bank of canada, to the mennonite savings and credit union kitchener, ontario 22 march 1999. i am delighted to be with you this evening to celebrate the 35th annual meeting of the mennonite savings and credit union. on this occasion, i propose to speak about the canadian economy and monetary policy. but given this audience, i thought i might start with some remarks on the future of the canadian financial sector – a subject that has certainly grabbed its share of headlines over the past year! in december 1996 the minister of finance appointed a task force to assess the current situation and the future prospects of the canadian financial services sector, and to make recommendations for change. in early 1998, while this inquiry was still on, four of canada ’ s six largest banks announced plans to merge. the task force submitted its report ( the mackay report ) last september. in december 1998 the minister of finance, having taken into account that report as well as assessments of the proposed mergers by the office of the superintendent of financial institutions and the competition bureau, decided not to allow the mergers. the government is now examining the issues facing the financial services sector and, in the course of 1999, it intends to present its proposals for modifying the relevant regulatory framework. the bank of canada is one of several agencies in ottawa that provide advice to the minister of finance on the appropriate legislative framework for the financial industry. because of this, i am not in a position to comment on specific proposals for change. but what i can do is offer some general comments on the broad issues involved in ensuring an efficient and sound financial industry in canada as we strive to adapt to ongoing worldwide changes in the provision of financial services. potential reforms of the canadian financial system canadian financial institutions are among the best providers of financial services in the world. these days, they are operating in an intensely competitive global marketplace, teeming with change spawned by rapid advances in technology and innovative new financial products. these powerful forces have transformed the way financial institutions around the world operate and the way they market and deliver their services. globalization creates both opportunities and challenges. we must make sure that canadian financial institutions can compete effectively in both domestic and international markets, and that they can offer canadians innovative, world - class financial services. the mackay task force says this means we should enhance competition in the financial services industry. how? primarily by reducing restrictions