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Michael A. Cohen

How will national and local planners face the challenge posed by urban growth in the less developed world? The author outlines the extent of the problem and some methods of tackling it.

Mr. Andrew Berg, Mr. Paolo Mauro, Mr. Michael Mussa, Mr. Alexander K. Swoboda, Mr. Esteban Jadresic, and Mr. Paul R Masson

Abstract

This paper examines the consequences of heightened capital mobility and of the integration of developing economies in increasingly globalized markets for the exchange rate regimes of the industrial, developing, and transition economies. It builds upon previous studies by IMF staff on various aspects of the exchange rate arrangements of member countries, consistent with the IMF's role of surveillance over its members exchange rate policies.

Mr. Andrew Berg, Mr. Paolo Mauro, Mr. Michael Mussa, Mr. Alexander K. Swoboda, Mr. Esteban Jadresic, and Mr. Paul R Masson

Abstract

The exchange rate regimes in today’s international monetary and financial system, and the system itself, are profoundly different in conception and functioning from those envisaged at the 1944 meeting of Bretton Woods establishing the IMF and the World Bank. The conceptual foundation of that system was of fixed but adjustable exchange rates to avoid the undue volatility thought to characterize floating exchange rates and to prevent competitive depreciations, while permitting enough flexibility to adjust to fundamental disequilibrium under international supervision. Capital flows were expected to play only a limited role in financing payments imbalances and widespread use of controls would insulate the real economy from instability arising from short-term capital flows. Temporary official financing of payments imbalances, mainly through the IMF, would smooth the adjustment process and avoid undue disturbances to current accounts, trade flows, output, and employment.

Mr. Andrew Berg, Mr. Paolo Mauro, Mr. Michael Mussa, Mr. Alexander K. Swoboda, Mr. Esteban Jadresic, and Mr. Paul R Masson

Abstract

Since the creation of the IMF at Bretton Woods, the international exchange rate regime has undergone very substantial changes, which may be broken down into four main phases. The first was a phase of reconstruction and gradual reduction in inconvertibility of current account transactions under the aegis of the Marshall Plan and the European Payments Union, culminating in the return to current account convertibility by most industrial countries in 1958. The second phase corresponds to the heyday of the Bretton Woods system and was characterized by fixed, though adjustable, exchange rates, the partial removal of restrictions on capital account transactions in the industrial countries, a gold-dollar standard centered on the United States and its currency, and a periphery of developing country currencies that remained largely inconvertible. The end of convertibility of the dollar into gold in the summer of 1971 was a first step toward the breakdown of this system, which collapsed with the floating of major currencies in early 1973, This marked the beginning of the third phase.

Mr. Andrew Berg, Mr. Paolo Mauro, Mr. Michael Mussa, Mr. Alexander K. Swoboda, Mr. Esteban Jadresic, and Mr. Paul R Masson

Abstract

The developing and transition countries whose exchange arrangements are the subject of this section cover a very broad range of economic development—from the very poorest to the newly industrialized economies with per capita incomes at levels that categorize them, along with industrial countries, as “advanced economies.” Correlated with the level of economic development, but not perfectly so, are both the degree of domestic financial sophistication and the extent of involvement with the global economic system, especially modern, global financial markets. The 30 or so countries that are most advanced in this last regard are commonly referred to as the “emerging markets.”

International Monetary Fund

This 2009 Article IV Consultation highlights that Malaysia has been hit hard by the global downturn. The economy is set to contract for the first time in 10 years. Global turbulence has spilled into the domestic financial markets. Executive Directors have commended the Malaysian authorities for sound macroeconomic management in difficult circumstances. Directors have also emphasized that, although the financial sector appears sound and benefited from the growth of Islamic finance, volatile global markets put a premium on crisis preparedness and proactive supervision.