international level. stability is the foundation for sustained economic growth, and crisis prevention and resolution is an integral part of our work. the imf discharges this mandate in a variety of ways, including the following. first, it provides the framework and mechanisms for international economic cooperation. with increasing integration in the world economy, the importance of this aspect cannot be overstated. second, it helps countries design macroeconomic policies that achieve and maintain high levels of employment and income. the promotion of open economies and trade is a key element of these policies. third, the imf helps in the orderly correction of a country ’ s balance of payments problems by providing temporary financing. the ways in which we carry out our operations are also unique in several respects. broadly - speaking, these may be divided into three categories of activities : • surveillance – this involves the monitoring of economic and financial conditions, both at the global level and in individual countries. for the imf, surveillance is a central instrument for maintaining monetary and financial stability. by obliging each imf member to engage in a regular consultation with us on its economic policies, the surveillance process also explicitly recognizes the role that all countries play in maintaining global stability. • lending – our financing role is focused in assisting members with balance of payments adjustments. through the temporary provision of funds, imf lending gives members breathing room to implement policy measures to overcome underlying economic problems. for the poorest countries, financing may be provided on concessional terms, and with longer maturities. the availability of imf funds to assist in economic adjustment gives confidence to members and the international system as a whole, since it lowers the incentive for countries to take adjustment measures which are damaging to the national and international economies. • technical assistance – technical advice and assistance is provided to member countries in areas of the imf ’ s expertise, primarily in macroeconomic and financial policymaking. by helping to build institutional and human capacity for the making of sound economic policies, imf technical assistance contributes to the building of strong economies and stable growth. the imf ’ s purposes, and its operational activities, were therefore designed with a key objective in mind – that is, the fostering of healthy national economies, linked by finance and trade, as the foundation for a robust global economic system. i think it correct to say that this vision for international peace and stability has produced remarkable results, for the past fifty years have been a period of growing economic prosperity and freedom. global per capita income has more than

of late, increasing criticism has been levelled at those standards. they are accused, in particular, of providing for an overly imprecise and schematic measurement of hazards in the field of credit risks and of failing to take account of up - to - date hedging techniques. to some extent this criticism is generally shared. however, a model based approach has not always given the banks the safety level which they might have expected. the recently experienced losses of banks demonstrate what should have been already known that risk models are not an instrument to predict future developments. regarding the basle capital provisions in general, which meanwhile constitute a standard that is accepted world - wide, they are adaptable enough for more recent developments in the markets to be integrated in that approach. that also goes for the topics under consideration at present, such as on - balance - sheet netting, credit derivatives and new capital elements. the dispute whether the standards should be developed further or whether a complete break with their approach is necessary in part seems to me a semantic problem rather than a material controversy. where does modernising end and where would redesigning start exactly? hitherto, some major risks - notably operational risks and legal risks - have not been measured and are therefore not included in the basle standards. but they should likewise be covered implicitly by the capital currently required. hence, if it is decided to leave risk measurement to the banks, as a basis for the computation of the necessary capital base in the case of the credit risks as well, it must be assured that all the other risks faced by a bank are taken into account in a suitable form, too. for, given the rising trend of risks, more precise risk measurement by the banks must not result in a decline in the capital base. this applies to the amount of capital required as well as to its qualitative features. with respect to both aspects capital standards should not be designed in such a loose way that even countries with crises in their banking systems could meet the requirements. special situations require special measures and possibly exceptions of the rules. however, the standard as such should be kept high enough to ensure credibility in the banking systems and the role supervisors play. regarding global players, who have a special responsibility for the stability of the financial system, even an increase of their capital base might be appropriate to take into account their systemic importance. viii “ panta rhei ”, “ all is flux ”. that is equally true of the development of the european financial