david dodge : making global economic institutions work – what the world needs now remarks by mr david dodge, governor of the bank of canada, to the chicago council on global affairs, chicago, 21 may 2007. * * * it is certainly an honour and a privilege to be able to address the chicago council on global affairs. for 85 years, the council has promoted the idea that the united states should take a leading role in addressing global challenges. and it has done so consistently through the years, even during times when isolationism was more fashionable. sixty years ago, just a few months after the council celebrated its 25th anniversary, secretary of state george marshall delivered his famous commencement address at harvard in which he outlined what would become known as the marshall plan. to those who asked why the united states should take such a pre - eminent role in rebuilding war - torn europe, marshall said : " it is logical that the united states should do whatever it is able to do to assist in the return of normal economic health in the world, without which there can be no political stability and no assured peace. " 1 that sentiment remains absolutely true today. but the marshall plan was not the only major event of 1947. that year also marked the opening of the united nations conference on trade and employment in havana, cuba – the first step in the creation of a rules - based multilateral trading system. it is fitting that we should mark the 60th anniversary of these events, not just to commemorate their happening, but to celebrate the economic progress that they made possible – progress that has lifted millions of people out of poverty and, to repeat marshall's words, " without which there can be no political stability and no assured peace. " the postwar reconstruction of europe and the development of a rules - based multilateral trading system came a couple of years after the united nations conference at bretton woods, new hampshire that led to the creation of the international monetary fund ( imf ) and the world bank. these institutions were joined in 1948 by the organisation for european economic co - operation ( oeec ), which was formed to administer aid under the marshall plan. the oeec eventually evolved into the organisation for economic co - operation and development ( oecd ), which has been an extremely useful venue where economic and financial authorities can gather and discuss how best to promote strong economies through liberalized markets, freer trade, and sound macroeconomic policies. these institutions provided a framework that helped the so - called " first world "

and collaboration on international monetary problems, and is tasked with facilitating the expansion and balanced growth of international trade. in short, the fund was designed to be an institution where national authorities could work out the " rules of the game " for the international economy. thanks in part to this u. s. leadership, the world thus had an institution dedicated to promoting a market - based international financial order and to avoiding the protectionist, " beggar - thy - neighbour " policies that so hobbled the world economy in the 1930s. delegates at bretton woods were ultimately able to see how their own country's interest was clearly wrapped up in a collective interest. treasury secretary henry morgenthau referred to the conference as the end of economic nationalism. while the world and its economy have undergone revolutionary change in the past 60 years, we still need institutions where authorities from the key nations in the global economy can work out the rules of the game for economic policies. at bretton woods, it sufficed to have the allied nations around the table. but today, there are a number of different players who need to be present if we are to successfully remove impediments to market - based adjustments in the global economy. we need to make sure that these new players are at the table. but at the same time, we very much need the united states to show the same leadership that it did at bretton woods 60 years ago. where should we concentrate our efforts? i mentioned the oecd at the beginning of my remarks. this institution has been enormously helpful over the years. indeed, i can recall attending oecd meetings in the 1970s and 1980s, when national authorities developed a consensus on the policies that would provide the strongest base for sustainable economic growth. these included monetary policy directed at keeping inflation low and stable, a disciplined fiscal policy, structural policies that encourage economic flexibility, and a framework for trade liberalization. but while the oecd continues to provide excellent analysis, particularly in terms of structural policies, it is not yet a truly global table. indeed, there are only two economic tables with a fully global representation : the world trade organization ( wto ) to deal with trade issues, and the imf to deal with macroeconomic and financial stability issues. my comments on the wto will be very brief. i mentioned increased protectionism as a key risk stemming from the persistence of global imbalances. this risk is heightened by the lack of progress at the doha round of trade