The International Monetary Fund said it will seek to better account for the effect of member nations’ domestic policies on the rest of the world when monitoring their economies.
“In the current challenging and highly interconnected global economic environment, it is critical to have effective surveillance to enable the early detection of risks and provide timely policy advice,” IMF Managing Director Christine Lagarde said in an e-mailed statement today after the IMF board decision.
The Washington-based IMF has been criticized for missing signs of fragility that led to the 2008 global financial crisis. A report last year showed it also faced “dissatisfaction” about how it assesses exchange rates, prompting a pledge to include data such as capital flows when reviewing member nations’ external stability.
Under today’s decision, the fund will focus on both exchange rates and domestic policies when assessing a country’s economy, Lagarde said. It will be able to look at the potential spillover of countries’ policies when they affect global stability, she said.
The IMF will also start a pilot report to make external monitoring more effective, Lagarde said. With it, surveillance will “ encompass more systematically, in addition to exchange rates, developments in current accounts, capital accounts, reserve accumulation, capital flow measures, and foreign assets and liabilities,” she said.
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