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S. Fisher
First Managing Director IMF,
J.F.K. School of Government, Harvard University
27 June 2001

International Economic Policy
under the Clinton Adminsitration

In 1990, it was possible to believe that the leadership of the international economic system was moving away from the United States, towards Japan and Europe. A decade later there was no question that the United States had for good or ill maintained its position. 

I believe it was mainly for the good. 

In describing the development and exercise of that leadership, I will focus on two closely related topics: the financial crises in Mexico, Asia and Russia; and the reform of the international monetary system.

The Financial Crises


But there is an important question here: whether the U.S. (more generally, the G-7) and the IMF continued assisting Russia for too long?

There is room to quibble about whether assistance to Russia should have stopped three months earlier or six months earlier than it did. But the aid effort to Russia - relying largely on IMF and other IFI funding, as well as bilateral contributions from Germany and others - was fundamentally successful. The main evidence for that view is there is now absolutely no disagreement in Russia on the right economic path to take. Everything that we in the IMF were trying to support in the way of macroeconomic stability and the direction of structural reforms is now conventional wisdom in Russia. No doubt the path of reform will not be smooth and there will still be setbacks along the way, but the goal and the route are clear to Russians.

The International Financial System

Now let me turn to the U.S. role in the reform of the international financial system. DeLong and Eichengreen describe this as a three-pronged approach. First, increasing transparency and disclosure of information to markets; second, strengthening the financial assistance available to countries in trouble; and third, a greater effort to make the private sector bear some of the costs of these crises. The last is the most difficult of these prongs to make stick, and more work remains to be done to ensure that private sector involvement operates effectively. But overall, this approach to improving the international financial architecture is proving successful. 

I would add to the list the emphasis on the strengthening of financial systems. This is a particularly important area, in which there has been much progress - and the effort is continuing. There are also areas on the margin where more could have been done: for instance, in requiring greater provision of information by hedge funds. 

U.S. leadership in the reform of the international financial system often took the form of institutional innovation. Within the IMF, the U.S. took the lead in promoting changes in our lending facilities. This included the Systemic Transformation Facility, introduced in 1993 to help start transition economies on the road to reform. In 1995 the Fund adopted a policy to offer support for currency stabilization funds within stand-by or extended arrangements, to help countries support fixed exchange rate pegs as a way of getting out of high inflations.