The systemic agenda addressed by the Monterrey Consensus of the International Conference on Financing for Development (United Nations, 2002, annex) covers two broad groups of issues. The first relates to the structural features of the international monetary system, and the possible vulnerabilities that they pose for the world economy or for specific groups of countries. The second relates to the institutional design of the current international financial system. With respect to the first set of issues, the analysis undertaken in the present chapter starts with the major macroeconomic imbalances that characterize the world economy today, which many observers fear may. | Systemic Issues 165 Chapter VI Systemic issues The systemic agenda addressed by the Monterrey Consensus of the International Conference on Financing for Development United Nations 2002 annex covers two broad groups of issues. The first relates to the structural features of the international monetary system and the possible vulnerabilities that they pose for the world economy or for specific groups of countries. The second relates to the institutional design of the current international financial system. With respect to the first set of issues the analysis undertaken in the present chapter starts with the major macroeconomic imbalances that characterize the world economy today which many observers fear may become unsustainable. This issue relates at least in part to the design of the international reserve system particularly to the role of the United States dollar as the major international currency. The following section looks at the evolving structure of private international financial markets and its potential vulnerability to systemic risk. A particular source of concern is the potential interaction between the macroeconomic risks associated with the current global imbalances and the potential vulnerabilities generated by the financial innovations and consolidation that are taking place. A third issue relates to the asymmetries that characterize the international financial system which not only subject developing countries to pro-cyclical private capital flows but also limit their room for manoeuvre in adopting counter-cyclical macroeconomic policies. The major implications of this problem were dealt with in chapter III this chapter considers its implications for the role of the international financial institutions in crisis prevention and resolution. The analysis of these problems includes some issues relating to institutional design such as the role of multilateral surveillance the possible role of the International Monetary Fund IMF in the coordination of .
