with the resolution of imbalances. so there are impediments in europe, the united states, and asia that are all getting in the way of a timely and orderly resolution. because of this, global imbalances are growing, and this is increasing the risk of a disorderly correction at some point down the road. in addition, the longer the adjustment is delayed, the greater the risk that industrialized nations will take protectionist measures against emerging - market economies that are perceived as not playing by the rules. the rules of the game so, what are the policy prescriptions that hold the greatest probability of bringing about an orderly resolution of the imbalances? put simply, what should be the " rules of the game? " i've already spoken about the consensus that exists on the need for action domestically. what i want to do now is talk about what would be helpful on the international front. to begin with, we certainly need to preserve and increase the potential for goods and services to move freely across national borders. this means further enhancement of the rules of free trade through the doha round and a strengthening of the world trade organization ( wto ) to ensure proper compliance with the rules. this effort, as you know, is going on rather more slowly than we would have hoped three years ago, and my sense is that the prospects for substantial improvement are not as good as we thought they might be. however, keep in mind that the last round took 10 years to complete. so, it is important to keep moving forward and to support the wto in its enforcement of proper compliance with the rules. of course, free trade needs the support of well - functioning capital markets, as well as exchange rate regimes that allow market - equilibrating forces to play a greater role in the adjustment process. just as the wto provides critical support for trade, there is also a need for an effective organization to support the international monetary system. under bretton woods, this role was given to the international monetary fund ( imf ). but world financial conditions have evolved dramatically, while in many respects, the imf remains the same institution that was created in 1944 for an era of fixed exchange rates. to be clear, the basic mandate of the fund - the promotion of an international order that fosters economic growth and investment - remains relevant and important. and the fund's main responsibilities - surveillance, lending, and helping member nations to develop their financial infrastructure and efficient product and labour

to build a liberal economic order and framework for freer trade. but it's difficult to discuss problems and find solutions if key players don't feel that they are adequately represented. there is a crucial need to build an international financial institution that is seen as meeting the needs of all members. a good start would be to re - examine the representation of asian and other emerging - market economies, and the implications for their quotas and voting power on the imf's board. a larger stake by asian members in the imf also implies greater responsibility on their part for the success of the fund as guardian of the international monetary and financial systems. indeed, by taking greater responsibility, asian nations would affirm their commitment to the fund's important objectives. moreover, by being able to draw more on the strengths of the asian economies, the imf would be in a better position to do its job properly. conclusion i truly hope that such an institution - one that makes progress in these four areas - will emerge from the strategic review of the imf that is currently underway. the creation of a global institution for the twenty - first century is tremendously important, not just for canada, but for all nations. if we can get it right, a more effective imf would be helpful in the worldwide effort to resolve global imbalances in an orderly way. but a global institution can't do it all by itself. policy - makers around the world need to make sure that they are part of the solution and not part of the problem. all countries must recognize that it is doubly important to pursue the sound domestic policies that i mentioned - the promotion of flexible markets, the creation and maintenance of a sound financial system, and the pursuit of sound fiscal and monetary policies. clearly, following these policies is in each country's own domestic interest. but the benefits would flow beyond national borders. if we all follow appropriate policies, then market mechanisms can defuse the danger posed by global imbalances. and that is an outcome that is in everyone's interest.