there is every reason to believe that a market adjustment to these imbalances will take place. if this adjustment is disorderly, it would affect the economy through a sudden drop in demand and prices and a resulting decline in economic output. it could also cause a painful correction in capital markets and exchange rates. in a worst case scenario, it could do both. what can we do? that is why we worry about the risks from current account imbalances, and why the bank of canada has been focusing on the implications of these risks. policy - makers around the world have a responsibility to facilitate adjustments in a way that keeps the global economy growing at potential and mitigates the impact of these risks. our job is to provide a framework that helps market forces promote an orderly adjustment. so what can we collectively do to help prevent a disorderly adjustment? what insurance can economic and financial policy - makers take against these risks? i said earlier that the resolution of global imbalances will require market - based solutions. in many cases, building the right framework will involve eliminating some of the policies that inhibit markets from resolving these imbalances. this was the theme of the g - 7 discussions at boca raton two years ago. let me briefly look back at what we called for in our statement following those meetings. then i'll review what progress has been made. central bankers and finance ministers emerged from the boca raton meetings with a list of policy initiatives that are key to addressing global current account imbalances. this list included five priorities : first, microeconomic policies that increase flexibility and raise productivity growth and employment ; second, the development of well - functioning domestic capital and financial markets ; third, resumption of the doha round of multilateral trade negotiations ; fourth, sound fiscal policies ; and fifth, flexible exchange rates that reflect economic fundamentals and promote smooth adjustments. to deal with global current account imbalances in an orderly and efficient way that supports continued growth, we have to make progress on all five of these policy fronts. it simply won't do for countries to pick one or two of these policy priorities and ignore the others. and we can't delude ourselves into thinking that economic imbalances will be resolved in an orderly way through exchange rate adjustments alone. progress has to be extensive, international, and simultaneous. let's review our collective progress on these priorities in the two years since our meetings in boca raton. i'll start with domestic microeconomic

bandid nijathaworn : some thoughts on imf reform on crisis prevention and crisis resolution speech by mr bandid nijathaworn, deputy governor of the bank of thailand, presented to the g - 20 workshop on reform of bretton woods institutions, tokyo, 28 february 2006. * * * thank you chairman, first, let me thank the ministry of finance of japan for inviting me to this workshop on the reform of the bretton woods institutions. this workshop is another reminder that the work on imf reform is still ongoing. next year will be a full ten years since the height of the asian financial crisis. over the past decade, many important ideas on the reform of the imf have been advanced, but still there is no consensus on how the reform should move forward. i see today ’ s workshop as another opportunity to contribute to this ongoing debate. and whatever the outcome may be, the reform will certainly mark a critical turning point for the global economy, as the bretton woods institutions attempt to adapt their roles and responsibilities to the forces of globalization. today, i have been asked to speak on imf crisis prevention and crisis resolution. given the limitation of time, and the fact that the recommendations on these two issues have been many and are well - known, i thought the best way for me to add value to today ’ s discussion is to share with you our thoughts on the subject, as well as to make three specific points. the first point is how the fund can improve its surveillance by focusing on how best to reduce the likelihood of crises in emerging markets, in particular, how to help emerging markets better cope with the challenge of the next crisis. the second is our view that the fund ’ s surveillance and its works on crisis resolution should recognize the usefulness of national and regional self - insurance efforts that are being pursued by a growing number of countries. and the third is our suggestion that the fund ’ s works on crisis prevention and crisis resolution can benefit from a clear separation of these two functions in terms of duties, responsibilities, and decisionmaking, so as to achieve greater effectiveness and accountability. to begin, the consensus seems to be that the fund has not been doing a good - enough job on crisis prevention and crisis resolution. this is evidenced by a string of financial crises in emerging markets that had happened, which does not reflect well on the fund ’ s surveillance mechanism. in addition, dissatisfactions were expressed in the fund ’ s perceived lack of consistency and co