Globalization and the Changing Character of the International Monetary Fund

The rapid reemergence of an integrated world economy in the last third of the twentieth century has raised questions about the suitability and adaptability of institutions for global economic management created in the very different circumstances of mid-century. Two major features characterize the new integrated world economy and require an institutional response: the first is the liberalization of capital movements; the second is the dramatic political realignment of 19891991 following the end of the Cold War. With the collapse of the Soviet bloc, the Bretton Woods institutions became for the first time genuinely universal. This paper examines how one quite central institution, the International Monetary Fund, has responded to these developments, and also reflects on how it is likely to evolve in the future. In particular, it is argued here that supply and management of economic information and of financial supervision has become an increasingly important task (one that was largely not envisaged at Bretton Woods). The gold-dollar standard has been replaced by an information standard, which requires new techniques of management. Secondly, the rise of a new consensus about the management of economic policy has brought about an involvement of the IMF in questions that are much more politically sensitive and problematical — because they involve intrusions on national sovereignty — than anything that could have even been debated at Bretton Woods.