of the fund, through the executive board, have the responsibility that the fund takes sensible decisions. they have an equally important responsibility to safeguard the credibility and soundness of the institution. this can best be done by ensuring that, to the extent possible, the game is played according to the rules. to best pursue its mandates, the fund must not only be competent and financially sound, it must also be able to preserve its own independent judgment. with this caveat, i would have no problem sharing the very widespread belief that if the fund did not exist, we would have to invent it.

in collaboration with the world bank. switzerland volunteered to undergo such a check - up in 2002. once more, it was a useful and gratifying experience to interact with outside experts. and the reason i am saying this has nothing to do with the fact that the swiss financial center came out of this surveillance exercise with very high marks. 3. financial crisis resolution let me now turn to the second part of my presentation, the fund ’ s role in crisis resolution. here i have no direct swiss experience to report on since my country, fortunately, never had to resort to financial support from the fund. i will therefore speak from the perspective of a medium - size shareholder that believes that financial crises are market failures with potential systemic risks and that the fund can and should play an important role in resolving them. the nature, scale and spread of financial crises have changed dramatically since the tequila turmoil in mexico in 1994. financial integration and capital account liberalization brought about a huge increase in financial flows. emerging economies did benefit from this new reallocation of international savings and some staggering economic results were obtained ( annual gdp growth between 1986 and 1996 for countries in south - east asia averaged close to 8 percent ). however, the new financial setting also made emerging countries particularly vulnerable to sudden changes in market sentiment. losses in investors ’ confidence could erupt much more quickly and spread across markets in a matter of days. unfortunately, the economic and social costs of the new crises also increased substantially. i think we can safely say that the fund, like anybody else, was caught by surprise by the virulence of the turmoil that hit asia in the 90s. when thailand and even more so korea were on the verge of financial collapse the fund looked very much like those generals always ready to fight the previous war. not even its financial means were adequate, and governors were rushed to decide a speedy 45 percent increase in quotas in january 1998 to supplement the rapidly depleting fund resources. it didn ’ t take the fund long, however, to react, to pick up the challenge and, all things considered, to come out of that difficult situation relatively unscathed. no - one should claim that everything went smoothly, though, or that no mistake has ever been made. from the side of the fund, too, it was a particularly bumpy trial and error process. quickly restoring market confidence became the name of the game. how? this is the difficult question. i shall not elaborate on the design of the various programs