in the midst of the crisis, these gains must not be forgotten. the multilateralism of bretton woods at the end of the second world war, 45 countries agreed to establish a new international financial and economic order with the bretton woods institutions, the imf and the world bank, at its center. in his inaugural speech to the bretton woods conference in 1944, us treasury secretary henry morgenthau noted the following : “ we know that economic conflict must develop when nations endeavor separately to deal with economic ills which are international in scope. to deal with the problems of international exchange and of international investment is beyond the capacity of any one country, or of any two or three countries. these are multilateral problems, to be solved only by multilateral cooperation. they are fixed and permanent problems, not merely transitional considerations of the postwar reconstruction. they are problems not limited in importance to foreign exchange traders and bankers but are vital factors in the flow of raw materials and finished goods, in the maintenance of high levels of production and consumption, in the establishment of a satisfactory standard of living for all the people of all the countries on this earth. ” 3 these wisely spoken words are as relevant today as in 1944. when the imf and the world bank were established, it marked the beginning of a period of international economic and financial cooperation which over time embraced virtually all the countries of the world. the bretton woods institutions have served their membership well. when needed, their policies have adapted promptly and timely to changes in the world economy and the global financial system. the imf, with its crucial competence, has been a key forum for policy collaboration. its surveillance and lending activities are unique. i strongly believe that global cited inter alia in harold james : international monetary cooperation since bretton woods, the international monetary fund, washington d. c., 1996. governance is best served by a statutory - based international economic order, with effective and legitimate multilateral institutions where all countries are represented. in the recent decade, the rapid expansion of many large emerging economies has greatly altered the global economic landscape. most dramatic is the re - entry of china as a major economic power. at the same time, the growing imbalances in the world economy became and continue to be a source of instability, in addition to spurring protectionist tendencies. it is perhaps time to honor some fundamental principles, such as the one noted in an imf pamphlet from 1992 : “ the philosophy of the articles of agreement

the imf in particular, to permit it to play an effective role in tackling the the unique nature of the responsibilities of the international monetary fund. imf pamphlet series no. 46, 1992, footnote 54. how economics managed to make amends, by arvind subramanian, peterson institute for international economics. op - ed in the financial times december 28, 2009. crisis. indeed, the g20 increasingly uses the imf as an instrument of its policy implementation. the governance structures of the imf have received considerable attention, as they are not deemed to adequately reflect recent important changes in the global economy. misgivings about the legitimacy of these structures have played a role in prompting the g20 member countries to “ … designate [ d ] the g20 to be the premier forum for our international economic cooperation ” as agreed by the g20 leaders at their summit in pittsburgh last september. with his presence at the world economic forum meeting in davos last month, the chair of the g20 aimed to “ drum up support for the idea of making the summit [ in korea later this year ] a “ premier forum ” where all major discussions on worldwide economic cooperation will take place ”. 6 therefore, the current ambition of the g20 may not only be driven by the global crisis. it may also reflect the frustration of some key countries with what they see as a slow evolution of the decision - making bodies of the imf in response to changes in the composition of the world economy and the rise of new economic powers. international policy cooperation has thus moved out of statutory bodies and into groups of a select few, bypassing established channels and fora. other countries do not participate, directly or indirectly, but are called upon to contribute to efforts that others have agreed. the g20 discusses and aims to agree on changes in imf governance. the vast majority of the membership of the imf has no voice or representation in these discussions, including all lowincome countries and most emerging economies. if they are not addressed effectively, the large and growing global imbalances that contributed to the current crisis are likely to widen anew. this would again put at risk the stability of the global economy. linked to these prospects are the continued rigidity of important exchange rates and excessive reserve accumulation leading to the build - up of unsustainable debt. i agree with those who have said that in recent years, the international monetary system failed to promote timely and orderly economic adjustment. 7