Reforming the International Financial Architecture


This paper is a revised version of comments on a paper by Barry
Eichengreen presented at a Federal Reserve Bank of Boston conference,
Rethinking the International Monetary System, in June 1999. The comments
draw on a book-length manuscript currently in preparation, entitled Turbulent
Waters: Cross-Border Finance in the 21st Century. The comments provide
an overview of the fundamentals of the subject of architectural reform;
emphasize that the advanced industrial nations, not merely the emerging-market
nations, need to strengthen the prudential oversight of their financial
systems; stress the importance of collective surveillance of general
macroeconomic policies as well as supervisory and regulatory policies;
support the widespread introduction of collective-action clauses into
international bond contracts; and criticize the currently fashionable
conventional wisdom about exchange regimes and exchange rates.