The G20, the Crisis and the Redesign of the International Financial Architecture

All severe crises have required a reformulation of the International Financial Architecture (IFA). The G20, abruptly turned into a discussion and action forum to cope with the crisis, focused its work on two areas: first, the coordination of the macroeconomic policies to come out of the crisis and, second, the reform of IFA as regards financial regulations and multilateral lending and supervision organizations. Other critical aspects, such as the international monetary system operating rules, were not part of the IFA’s agenda. In this context, the current exchange rate and monetary “non-regime” which gave rise to phenomena such as global imbalances, lacked clear rules about the role played by the dollar in the supply of international liquidity and as reserve value, and also lacked a lender of last resort, is still subject to an intense discussion. The opening of the IFA redesign process to other players, such as the emerging economies, is undoubtedly a positive sign. Now, the challenge is to continue supporting this framework once the crisis has been overcome so that these countries may have a less asymmetric international insertion.