. so those are some of the key lessons we can draw from our experiences of the past few decades. in canada, we have tried to apply these lessons to our own economic situation. and i would argue that doing so has helped us handle economic shocks better recently than in the past. now, if we apply the principle of trust that is behind those lessons to our international financial institutions, we can get some idea of how these institutions might evolve to better work for the global economy. game theorists will tell you that the best results come when the players see each other ’ s behaviour and learn from it. put simply, actions speak louder than words. we have already seen the gatt evolve into the wto, which establishes the ground rules for international trade and calls to account those countries that are not playing by the rules. such an institution is essential if we are to reduce the frequency of “ lose - lose ” trade disputes i mentioned earlier. but for the wto to go further, as it should, it is clear that progress needs to be made in the areas of greatest interest to the poorer nations. after all, the current round of talks is supposed to be the “ development round. ” so it is incumbent on us in the developed world to “ do the right thing, ” and overcome domestic political difficulties to open our markets in areas such as agriculture and textiles. recently, we have seen the imf take steps to strengthen its surveillance function. these steps should be supported. countries should strive to meet the highest standards for data dissemination and should welcome assessments of their economies and financial systems. only when all the players have complete trust in the numbers - whether they are part of a nation ’ s economic statistics or a firm ’ s balance sheet - will investments be made most efficiently and effectively. the imf ’ s other role, for which it is perhaps better known, is as provider of emergency liquidity. by the end of the 1990s, the fund had increasingly found itself providing financial assistance many times in excess of a country ’ s quota, in situations where sustainability, not a lack of liquidity, appeared to be the real issue. this is problematic, for a number of reasons. perhaps most importantly, when debtors or creditors presume that there will be large official bailouts, there is the possibility of “ moral hazard. ” this is a case where policy - makers have not provided the incentives for debtors and creditors to do the right thing. in recent years, the bank of canada

and the bank of england worked together to develop a “ middle - ground ” approach to crisis resolution. this approach, which was detailed in a joint paper published in 2001, was designed to provide the right incentives for debtors and creditors. it contained three basic elements. first, “ presumptive limits ” to official assistance, which would be known in advance. secondly, the possibility of exceptional official lending, but only in the unlikely event that a crisis threatened global financial stability. third, orderly standstills or temporary suspensions of debtservice payments to give distressed debtors some time to take steps, including debt rescheduling, to address their problems. since that time, the g - 7 finance ministers and central bank governors have adopted much of this approach in the context of their action plan for crisis prevention and resolution. what is important now is that we support that plan and enforce the rules that have been put in place. if we ignore the rules that have been established, we risk losing the trust that we are trying so hard to build. to conclude, i hope that i have been able to illustrate the importance of trust. by strengthening this trust, we can make the global financial system work better. and by doing so, we can deal with the changing fortunes of the world economy and find a more efficient means of financing world growth.