, em. asia excl. china euro area - 10 united states - 30 united states - 50 - 70 sources : imf, world economic outlook, october 2009 ; bureau of economic analysis. notes : ( 1 ) calculated as the cumulated current account balances, starting in 1980. ( 2 ) inludes only emerging and developing economies. ( 3 ) actual net foreign asset position ( at market values ). figure 3 nominal effective exchange rate ( 2005 = 100 ; monthly data ) united states euro area japan china source : bank for international settlements. note : increases signal appreciation. figure 4 public sector fiscal balances ( percent of gdp ) projections - 2 - 4 - 6 - 8 - 10 japan united kingdom - 12 united states euro area - 14 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 sources : imf, world economic outlook, october 2009. notes : ( 1 ) general government. ( 2 ) based on weo projections, which assume some fiscal tightening starting in 2010 in emerging economies and 2011 for advanced economies. figure 5 public debt levels ( percent of gdp ) projections japan united kingdom united states euro area 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 sources : imf, world economic outlook, october 2009. notes : ( 1 ) general government gross debt. ( 2 ) based on weo projections, which assume some fiscal tightening starting in 2010 in emerging economies and 2011 for advanced economies. figure 6 equity prices in us dollars ( daily, january 2007 = 100 ) jan - 07 may - 07 sep - 07 emerging economies jan - 08 may - 08 brazil sep - 08 china jan - 09 may - 09 sep - 09 russia india g7 source : thomson reuters datastream.

##rrencies had the additional advantage that the us net investment position improved when the dollar depreciated. although the international monetary system based on the “ dollar standard ” has not been performing some of its essential functions, it is by no means clear what could replace it. all those that have been mentioned – a supranational currency like the sdr ; a tripolar system based on the dollar, the euro and an asian currency – face very substantial difficulties. underlying all this is the fact that the international monetary system that emerged after the demise of bretton woods is a “ non - system ”, driven by the revealed exchange rate preferences of the individual countries, with a very weak multilateral surveillance, despite recent attempts to strengthen it. the regime of fixed exchange rate pegs was never replaced by one of generalised free floating, but instead gave way to a hybrid system. in practice, throughout the last 35 years, the exchange rate policies of a majority of countries have been marked by widespread “ fear of floating ”, with large foreign exchange intervention. this fear is not at all surprising, since large exchange rate fluctuations driven by capital flows can be highly disruptive in a world that is increasingly integrated economically and financially 3. a broad and lively debate on the design of such tools has recently developed. see, for example, the paper by c. borio on “ implementing the macroprudential approach to financial regulation and supervision ” ( published in banque de france financial stability review, september 2009 ), the discussion paper by the bank of england ( “ the role of macroprudential policy ”, discussion paper, november 2009 ) and the report of the warwick commission on international financial reform ( the report of the second warwick commission report : in praise of unlevel playing fields, november 2009 ). see also, on these issues, i. visco, “ the global crisis : the role of policies and the international monetary system ”, cit. 4. the main challenges ahead 4. 1 correcting global imbalances and fostering sustainable growth whatever the shape of the future system, an urgent task – to be addressed as soon as the economic situation improves – is correcting existing imbalances. the fundamental macroeconomic imbalances that lay at the root of the financial crisis are not being righted by the consequent global recession. at present, the rise in us private sector saving and the sharp fall in investment, partly offset by a larger public sector deficit,