IMF surveillance in crisis: The past, present and future of the reform process

Global Society

Volumn 26, Issue 1, 2012, Pages 43-60

  Moschella, Manuela ^a  

^a NONE

Author keywords

[No Author keywords available]

Indexed keywords

ECONOMIC REFORM; FINANCIAL CRISIS; IMF; REFORM PROCESS; SPILLOVER EFFECT;

EID: 79960268782     PISSN: 13600826     EISSN: 1469798X     Source Type: Journal    
DOI: 10.1080/13600826.2011.629987     Document Type: Article

References (93)

1. The literature on the causes of the subprime crisis is huge and any indication is necessarily selective. Among the analyses conducted by international supervisory bodies and panels of international experts see, for instance, Bank for International Settlements, Annual Report (Basel: Bank for International Settlements, 2008), Jacques de Laroisiére, The High Level Group on Financial Supervision in the EU (Brussels, 2009); available at and IMF, Global Financial Stability Report (Washington, DC: IMF, April 2009).
2. IMF, Bilateral Surveillance over Members' Policies Executive Board Decision, 15 June 2007.
3. Independent Evaluation Office (IEO), IMF Performance in the Run-Up to the Financial and Economic Crisis: IMF Surveillance in 2004-07 (Washington, DC: IMF, 2011).
4. Dominique Strauss-Kahn, Crisis and Beyond-The Next Phase of IMF Reform, Speech delivered at the Peterson Institute for International Economics, Washington, DC, 29 June 2010.
5. On the legacy of past policies for today's reforms to IMF surveillance, see also Manuela Moschella, Lagged Learning and the Response to Equilibrium Shock. The Global Financial Crisis and IMF Surveillance, Journal of Public Policy, Vol. 31, No. 2 (2011), pp. 1-21.
6. On the importance o f organisational culture for the analysis of the politics of change see Catherine Weaver, Hypocrisy Trap: The World Bank and the Poverty of Reform (Princeton, NJ: Princeton University Press, 2008).
7. The conceptualisation of layering and conversion draws from the analyses developed in Eric Schickler, Disjointed Pluralism: Institutional Innovation and the Development of the US Congress (Princeton, NJ: Princeton University Press, 2001)
8. Wolfgang Streeck and Kathleen Thelen (eds), Beyond Continuity: Institutional Change in Advanced Political Economies (Oxford: Oxford University Press, 2005)
9. Kathleen Thelen, "Timing and Temporality in the Analysis of Institutional Evolution and Change", Studies in American Political Development, Vol. 14, No. 1 (2000), pp. 101-108
10. Kathleen Thelen, How Institutions Evolve. The Political Economy of Skills in Germany, Britain, the United States, and Japan (Cambridge: Cambridge University Press, 2004).
11. On the discretion that characterised the Fund's surveillance work after the end of the Bretton Woods system see, for instance, Manuel Guitián, The Unique Nature of the Responsibilities of the International Monetary Fund (Washington, DC: IMF, 1992), pp. 8-9.
12. A. Baker, "Financial Booms, Crisis Politics and Macroprudential Regulation: The Political Economy of an Ideational Shift", Paper presented at the AGORAWorkshop on Global Knowledge Networks, Brown University, 21-22 June 2010.
13. For an overview of the recent literature on macroprudential regulation and supervision see Gabriele Galati and Richhild Moessner, "Macroprudential Policy-A Literature Review", BIS Working Papers, Vol. 337, February 2011.
14. The 2007 Surveillance Decision had already introduced the concept of external stability as an organising principle for bilateral surveillance. Nevertheless, this principle has been extended in the reform proposals contained in IMF, IMF Executive Board Adopts Surveillance Priorities for 2008-2011, Press Release No. 08/238, 8 October 2008
15. IMF, Bilateral Surveillance Guidance Note (Washington, DC: IMF, 2009)
16. IMF, Communiqué of the International Monetary and Financial Committee of the Board of Governors of the International Monetary Fund, 25 April 2009.
17. IMF, Review of the Fund's Mandate-Follow-up on Modernizing Surveillance (Washington, DC: IMF, 30 July 2010).
18. For an overview of the arguments on legalisation as a form of legitimacy see, for instance, Christian Brütsch and Dirk Lehmkuhl, "Complex Legalization and the Many Moves to Law", in C. Brütsch and D. Lehmkuhl (eds), Law and Legalisation in Transnational Relations (London: Routledge, 2007), pp. 9-32.
19. I am indebted to Jan Aart Scholte for drawing my attention to the positive relationship between legalisation and legitimacy.
20. On the Fund's lending to low-income members, see Liam Clegg, "Post-crisis Reform at the IMF: Learning to be (Seen to be) a Long-term Development Partner", Global Society, Vol. 26, No. 1 (2012), pp. 61-81.
21. Whereas bilateral surveillance refers to the IMF's oversight activity over the policies of individual countries, multilateral surveillance refers to the analysis of global economic and market developments conducted in the Fund's flagship publications-i.e., theWorld Economic Outlook and the Global Financial Stability Report. For the purposes of this article, surveillance refers to the bilateral type although, as explained at greater length below, one of the crucial implications of the reforms proposed in the aftermath of the global financial crisis is that of blurring the line between bilateral and multilateral surveillance.
22. Harold James, "The Historical Development of the Principle of Surveillance", IMF Staff Papers, Vol. 42, No. 4 (1995), pp. 762-791
23. Louis W. Pauly, Who Elected the Bankers? Surveillance and Control in the World Economy (Ithaca, NY: Cornell University Press, 1997).
24. Discretion here refers "to the characteristics of the act of delegation-that is, a constitution, treaty, legislation, or other type of contract-that establishes the parameters of acceptable agent behaviour".
25. Mark A. Pollack, The Engines of European Integration. Delegation, Agency, and Agenda Setting on the EU (Oxford: Oxford University Press, 2003), p. 28.
26. Guitiàn, op. cit., p. 10.
27. For a discussion of this literature see Clegg, "Post-crisis Reform, op. cit.
28. Barbara Koremenos, Charles Lipson, and Duncan Snida, "The Rational Design of International Institutions", International Organization, Vol. 55, No. 4 (2001), pp. 761-800.
29. Darren G. Hawkins, David A. Lake, Daniel L. Nielson, and Michael J. Tierney (eds), Delegation and Agency in International Organizations (Cambridge: Cambridge University Press, 2006).
30. Catherine Weaver, Hypocrisy Trap, op. cit.
31. Jeffrey M. Chwieroth, "Normative Change fromWithin: The International Monetary Fund's Approach to Capital Account Liberalization", International Studies Quarterly, Vol. 52, No. 1 (2008), pp. 129-158
32. Manuela Moschella, Governing Risk: The IMF and Global Financial Crises (Basingstoke: Palgrave Macmillan, 2010).
33. For studies that have attempted to bridge the divide between the PA and constructivist scholarship, Daniel L. Nielson, Michael J. Tierney, and Catherine A. Weaver "Bridging the Rationalist-Constructivist Divide: Re-Engineering the Culture of the World Bank", Journal of International Relations and Development, Vol. 9, No. 2 (2006), pp. 107-139
34. Catherine Weaver, "The World's Bank and the Bank's World", Global Governance, Vol. 13, No. 4 (2007), pp. 493-512
35. Liam Clegg, "In the Loop: Multilevel Feedback and the Politics of Change at the IMF and World Bank", Journal of International Relations and Development, Vol. 13, No. 1 (2010), pp. 59-84.
36. This pragmatism is shared by other contributors to this special issue. See Clegg, "Post-crisis Reform", op. cit.
37. Donna Lee, "Global Trade Governance and the Challenger of African Activism in the Doha Development Agenda Negotiations".
38. Paul Pierson, "When Effect Becomes Cause: Policy Feedback and Political Change", World Politics, Vol. 45, No. 4 (1993), pp. 595-628.
39. Sven Steinmo, Kathleen Thelen, and Frank Longstreth (eds), Structuring Politics: Historical Institutionalism in Comparative Analysis (Cambridge: Cambridge University Press, 1992), pp. 251-267
40. Paul Pierson, "Increasing Returns, Path Dependence, and the Study of Politics", American Political Science Review, Vol. 94, No. 2 (2000), pp. 251-267
41. Paul Pierson, Politics in Time: History, Institutions, and Social Analysis (Princeton, NJ: Princeton University Press, 2004).
42. James Mahoney and Kathleen Thelen (eds), Explaining Institutional Change. Ambiguity, Agency, and Power (Cambridge: Cambridge University Press, 2010), p. 16.
43. See also Streeck and Thelen (eds), op. cit.
44. Schickler, op. cit.
45. For an overview of the different aspects of financial sector policy, Abdul G. Abiad, Enrica Detragiache, and Thierry Tressel, "A New Database of Financial Reforms", IMF Staff Papers, Vol. 57, No. 2 (2010), pp. 281-302.
46. Carlo Gola and Francesco Spadafora, "Financial Sector Surveillance and the IMF", IMF Working Papers, WP/09/247 (2009), p. 3.
47. See also Moschella, Governing Risk, op. cit.
48. On the lessons that were drawn from the Asian crisis for the governance of international finance see, for instance, Jacqueline Best, "Moralizing Finance: The New Financial Architecture as Ethical Discourse", Review of International Political Economy, Vol. 10, No. 3 (2003), pp. 578-603.
49. IMF Archives, SM/97/53, Biennial Review of the Implementation of the Fund's Surveillance over Members' Exchange Rate Policies, and of the 1977 Surveillance Decision (Washington, DC: IMF, 19 February 1997), p. 20.
50. IMF Archives, EBS/98/44, Review of Members' Policies in the Context of Surveillance-Lessons for Surveillance from the Asian Crisis (Washington, DC: IMF, 9 March 1998), p. 3.
51. Ibid., p. 4.
52. See also Bessma Momani, "Recruiting and Diversifying IMF Technocrats", Global Society, Vol. 19, No. 2 (2005), pp. 167-187.
53. Gola and Spadafora, op. cit.
54. IMF Archives, SM/95/22, Sup. 3, Reviews of Surveillance-Staff Operational Guidance Note (Washington, DC: IMF, 17 April 1995), p. 3.
55. IMF Archives, SM/97/178, Staff Operational Guidance, 3 July 1997, as reported in IMF Archives, SM/00/40, Biennial Review of the Implementation of the Fund's Surveillance over Members' Exchange Rate Policies, and of the 1977 Surveillance Decision (Washington, DC: IMF, 18 February 2000), p. 86.
56. Thelen, How Institutions Evolve, op. cit
57. Schickler, op. cit.
58. IMF, IMF-World Bank Financial Sector Assessment Program (Washington, DC: IMF, 1999).
59. In contrast to Article IV, however, FSAP reports are not obligatory. That is to say, member countries may voluntarily accept to disclose the relevant financial data to IMF staff teams in order to allow them to make their assessment of the domestic financial sector.
60. IMF Archives, EBAP/99/86, External Evaluation of Fund Surveillance (Washington, DC: IMF, 15 June 1999), p. 95.
61. Gola and Spadafora, op. cit., p. 45.
62. IMF Archives, EBAP/99/86, op. cit., p. 88.
63. IMF Archives, EBM/00/24, Biennial Review of the Implementation of the Fund's Surveillance over Members' Exchange Rate Policies, and of the 1977 Surveillance Decision. Summing up by the Chairman (Washington, DC: IMF, 10 March 2000), p. 102.
64. IMF, Biennial Review of the Implementation of the Fund's Surveillance and of the 1977 Surveillance Decision-Overview (Washington, DC: IMF, 2002).
65. IMF, Establishing International Capital Markets Department, News Brief No. 01/24, 1 March 2001.
66. IMF website, "About the Global Financial Stability Report", available: . (accessed 1 September 2010).
67. Strauss-Kahn, op. cit.
68. IEO, op. cit., p. 4.
69. The link to the speech Roubini gave to the IMF can be found in its blog EconoMonitor, "2006 and 2007 IMF Speeches by Roubini Predicting the Recession and the Financial Crisis", available: (accessed 6 August 2010).
70. Stephen Mihm, "Dr. Doom. Two Years Ago, Nouriel Roubini Predicted the Current Economic Crisis. Now He Sees Things Becoming Far Worse", New York Times Sunday Magazine, 15 August 2008.
71. Indeed, this anecdote is also illustrative of the "blinkering" effects of dominant ideational frameworks in global financial governance, as reflected on elsewhere in this special issue
72. See Lena Rethel, "Each Time is Different! The Shifting Boundaries of Emerging Market Debt", this issue.
73. G20, Communiqué from the Pittsburg Summit, 24-25 September 2009.
74. IMF, Modernizing the Surveillance Mandate and Modalities, Prepared by the Strategy, Policy, and Review Department and the Legal Department (Washington, DC: IMF, 26 March 2010), p. 4.
75. See also Moschella, "Lagged Learning", op. cit.
76. IMF, IMF Executive Board Adopts Surveillance Priorities, op. cit.; and IMF, Statement of Surveillance Priorities: Revisions of Economic Priorities and Progress on Operational Priorities (Washington, DC: IMF, 24 September 2009).
77. IMF, Financial Sector and Bilateral Surveillance-Toward Further Integration (Washington, DC: IMF, 28 August 2009).
78. IMF, Modernizing the Surveillance Mandate and Modalities, op. cit., p. 5.
79. On these issues see the findings of the 2011 report prepared by the IEO, op. cit.
80. IMF, Financial Sector Surveillance and the Mandate of the Fund (Washington, DC: IMF, 19 March 2010), p. 9.
81. IMF, Modernizing the Surveillance Mandate and Modalities, op. cit., p. 4.
82. IEO, op. cit.
83. Leo Van Houtven, Governance of the IMF. Decision Making, Institutional Oversight, Transparency and Accountability (Washington, DC: IMF, 2002), p. 15.
84. André Broome, "The International Monetary Fund, Crisis Management and the Credit Crunch", Australian Journal of International Affairs, Vol. 64, No. 1 (2010), pp. 37-54.
85. Biagio Bossone, The IMF, the U.S. Subprime Crisis, and Global Financial Governance, 3 February 2009, available: (accessed 3 June 2010).
86. IMF, Review of the Fund's Mandate, op. cit., p. 6.
87. See footnote 9.
88. Laura Kodres and Aditya Narain, "Redesigning the Contours of the Future Financial System", IMFspn1010 (Washington, DC: IMF, 2010), p. 4.
89. IMF, Bilateral Surveillance over Members' Policies, op. cit.
90. Nielson et al., op. cit.
91. Weaver, "The World's Bank and the Bank's World", op. cit
92. Clegg, "In the Loop", op. cit.
93. On this point see also Moschella, "Lagged Learning", op. cit.