International Financial Stability


The international financial system is fundamentally sound, although more susceptible than necessary to financial crises.  The continuing globalization of financial markets holds the promise of higher incomes and improved social conditions for open economies.  However, the costs of recent financial crises have been significant.  Unless greater stability in the international financial system is achieved, the promise of economic and social development may go unfulfilled.

Improving Global Financial Stability calls for coordinated reforms to improve institutions in developing countries and to refine the IMF’s ability to deal with modern financial crises.  The report recommends that developing country governments adopt international standards of best practice to support market-based institutions open to international investment.  It also suggests that countries move toward flexible exchange rates and the use of temporary taxes, if necessary to control short-term capital inflows, as they strengthen their financial systems.  It views the International Monetary Fund as essential in helping countries prevent crises and providing or restoring stability when they occur.

The report, released in May, 2000, was co-chaired by Kathleen B. Cooper, Chief Economist and Manager, Economics & Energy Division, Exxon Mobil Corporation, and George F. Russell, Jr., Chairman of Frank Russell Company. 

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