Introduction – International Financial Architecture

The reform of the International Financial Architecture (IFA) has always largely depended on decisions made in developed countries. For example, during the meetings of the G7, important decisions are taken which directly affect international financial markets and as such the capital sources of developing countries. The G7 established the Financial Stability Forum (FSF), which is performing a leading role in the process of implementing international financial standards and codes (S&Cs). Support of the G7 has also been crucial in the Heavily Indebted Poor Countries (HIPC) Initiative. Together with other developed nations, the G7 have a dominating influence in International Financial Institutions (IFIs) such as the IMF and the World Bank.

As a result of this influence, the policies of developed countries deeply affect the position of developing countries on international financial markets. It is therefore important that the concerns of developing countries are taken into account. An important opportunity for developing countries to raise their concerns is the joint semi-annual meetings of the IMF and the World Bank (i.e. the Annual Meetings in September and the Spring Meetings in April). The joint meetings gather Finance Ministers and Central Bank Governors. Also, the IMF/World Bank have side-meetings where groups of countries, e.g. the G24, the G7, East Asian & European officials exchange views and attempt to look for common positions.

The EU member states usually each have their own representatives in these and similar meetings instead of a single EU representative. Therefore, it is difficult to speak of one EU position. An exception is the European Central Bank (ECB), which stipulates certain policies for the members of the Euro Area. For certain issues, the position of national Ministries or Central Banks is more pronounced than the ECB. For instance, unlike the ECB the French Central Bank actively participates in the discussions on sovereign debt work-out mechanisms. As a result of the autonomy of EU member states, documents relevant for the IFA are mainly published at the national level.

Positions of developing countries are also widely differing. Nevertheless, through the G24 they aim to raise concerns at the international level in which they share similar interest. An important difference with the European and other developed countries is that they have much less influence in the IFIs. However, the decisions made within the IFIs to reform the IFA will affect developing countries more than industrialised countries.

Important issues for both governments in developed and developing countries which are discussed here, are:

• Crisis prevention. In the discussions on crisis prevention, the issue of international financial standards and codes (S&Cs) has come to the forefront. S&Cs is one of the few issues within the broader discussion on reforming the international financial system which has showed progress towards implementation. (See e.g. Griffith-Jones, 2002).
• Crisis solution. A need for new mechanisms for crisis solution has resulted into a renewed debate on sovereign debt work-out arrangements. It was the IMF with a proposal of a Sovereign Debt Restructuring Mechanism (SDRM) which has given new impetus to the discussions on debt work-out arrangements.

This section reviews the official positions of EU member states and of developing countries. The background is given in addition to some documents, speeches and statements.

IMF/World Bank Spring Meetings 2003 

The section of statements contains speeches from representatives of developed and developing countries regarding the international financial architecture such as S&Cs and debt restructuring. For previous meetings click here.