Front Matter

Front Matter

Author(s):
International Monetary Fund
Published Date:
September 2005
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Dollars, Debt, and Deficits

Sixty Years after Bretton Woods

Conference Proceedings

Banco de España

International Monetary Fund

© 2005 International Monetary Fund

Production: IMF Multimedia Services Division

Cover: Jorge Salazar

Dollars, debt and deficits: sixty years after Bretton Woods: conference proceedings -

[Washington, D.C.]: International Monetary Fund: Banco de España, [2005]

p. cm.

Organized by Banco de España and the International Monetary Fund.

ISBN 1-58906-453-4

1. International finance—Congresses. 2. Dollar—Congresses. 3. Debt—Congresses. 4. Foreign exchange rates—Congresses. 5. International Monetary Fund Congresses.

I. International Monetary Fund. Π. Banco de España.

HG3881.D67 2005

Price: US$35

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recycled paper

Contents

List of Participants

Enrique Alberola, Unit Manager, Banco de España

Juan Carlos Berganza, Economist, Banco de España

Lorenzo Bini-Smaghi, Director General, Italian Ministry of Economy and Finance

Jorge Blázquez, Advisor, Economic Office of the President of the Spanish Government

Geoffrey H. Board, Board Chief Representative, Reserve Bank of Australia

Jan Brockmeÿer, Deputy Executive Director, De Nederlandsche Bank

Ariel Buira, Director of the G-24 Secretariat

Matthieu Bussiére, Senior Economist, European Central Bank

William Calvo, Chief Economist, Banco Central de Costa Rica

José Manuel Campa, Professor, IESE

Agustín Carstens, Deputy Managing Director, International Monetary Fund

Jaime Caruana, Governor, Banco de España

Miguel de las Casas, Economist, Banco de España

Michael Casey, Head of the Funds Supervision, Central Bank & Financial Services Authorities of Ireland

Ralph Chami, Division Chief, International Monetary Fund

Roberto Cippa, Director of International Monetary Relations, Swiss National Bank

Kenneth Coates, Director, Centre for Latin American Monetary Studies

Daniel Cohen, Professor, Ecole Nórmale Supérieure

Giancarlo Corsetti, Professor, European University Institute

Daniel Daco, Head of Division, European Commission

Thomas Dawson, Head of the External Relations Department, International Monetary Fund

Guillermo de la Dehesa, Member of the Board, AVIVA

Michael Dooley, Professor, University of California and Deutsche Bank Special Advisor

Sonsoles Eirea, Economist, Banco de España

Santiago Elorza, Technical Advisor, Spanish Ministry of Economy

Yuchuan Feng, Deputy Governor’s Assistant, People’s Bank of China

Roger Ferguson, Vice Chairman, Board of Governors of the Federal Reserve System

Vicente Javier Fernández, Advisor, Spanish Secretariat of State for the Economy

Santiago Fernández de Lis, Director of the International Economics and International Relations Department, Banco de España

Iñigo Fernández de Mesa, Deputy Director General of EMU Affairs, Spanish Ministry of Economy and Finance

Stanley Fischer, Member of the Board, Citigroup Inc.

Allen Frankel, Head of the CGFS, Bank for International Settlements

Marcel Fratzscher, Senior Economist, European Central Bank

Luis de Fuentes, Deputy Director General, Spanish Ministry of Industry, Trade and Tourism

Peter Garber, Global Strategist, Deutsche Bank

Alicia García Herrero, Head of Division, Banco de España

Luis Garcia Lombardero, Advisor, Spanish Secretariat of State for the Economy

José García Solanes, Professor, University of Murcia

Francisco Gismondi, Director of Macroeconomic Analysis, Banco Central de la República Argentina

Giorgio Gomel, Director of International Affairs, Banca d’ltalia

Jane Haltmaier, Division Chief, Board of Governors of the Federal Reserve System

Hervé Hannoun, Deputy Governor, Banque de France

Claudio Irigoyen, Director of Monetary and Financial Policy, Banco Central de la República Argentina

Zhongxia Jin, Director General of the International Department, People’s Bank of China

Alfred Kammer, Deputy Managing Director’s Advisor, International Monetary Fund

Kenneth Kletzer, Professor, University of California

Malcolm Knight, General Manager, Bank for International Settlements

Panagiotis Konstantinou, RTN Research Fellow at the University of Rome III

Philip Lane, Director of the IIIS, Trinity College Dublin and CEPR

Nuno Leal de Faria, Deputy Director of the International Relations Department, Banco de Portugal

Eduardo Levy Yeyati, Professor, University Torcuato Di Telia

Ruogu Li, Deputy Governor, People’s Bank of China

Zhengming Liu, Chief Representative, People’s Bank of China Representative Office in Frankfurt

José Luis Malo de Molina, Director General of Economics, Statistics and Research, Banco de España

Luis Martí, Executive Director, International Monetary Fund

Manuel Martinez, Economist, Banco de España

Aurelio Martínez Estévez, Professor, University of Valencia

José R. Martínez Resano, Economist, Banco de España

Enrique Mendoza, Professor, University of Maryland

Gian M. Milesi-Ferretti, Division Chief, International Monetary Fund

Ashoka Mody, Division Chief, International Monetary Fund

Joaquín Muns, Member of the Board, Banco de España

John Murray, Advisor, Bank of Canada

Michael Mussa, Senior Fellow, Institute for International Economics

Franz Nauschnigg, Head of Division, Oesterreichische National Bank

Emilio Ontiveros, Member of the Board, AFI

Guillermo Ortiz, Governor, Banco de México

Adrian Penalver, Economist, Bank of England

José Pérez, President, Intermoney

Kristina Persson, Deputy Governor, Sveriges Risksbank

Jean Pisani-Ferry, Professor, University of Paris-Dauphine

Richard Portes, Professor, London Business School and CEPR

Federico Prades, Advisor, AEB (Spanish Banking Association)

Raghuram Rajan, Economic Counsellor and Director of Research, International Monetary Fund

Rodrigo de Rato, Managing Director, International Monetary Fund

Luis Ravina, Rector, University of Navarra

Carmen Reinhart, Professor, University of Maryland

Rafael Repullo, Director, CEMFI

José Juan Ruiz, Head of Department, Santander Central Hispano

Juan Ruiz, Economist, Banco de España

Sinikka Salo, Member of the Executive Board, Suomen Pankki

Javier Santiso, Chief Economist for Latin America and Emerging Markets, BBVA

Jesús Saurina, Head of Division, Banco de España

Miguel Savastano, Division Chief, International Monetary Fund

Miguel Sebastián, Director of the Economic Office of the President of the Spanish Government

Sunil Sharma, Division Chief, International Monetary Fund

Pedro Solbes, Second Vice President of the Spanish Government and Minister for Economy and Finance

Alberto Soler, Advisor, Spanish Ministry of Economy and Finance

Michel Soudan, Assistant of the International Service, National Bank of Belgium

Marc Olivier Strauss-Kahn, Director General, Banque de France

György Szapáry, Vice President, Central Bank of Hungary

David Taguas, Economist, BBVA

Fernando Tejada, Head of Division, Banco de España

Panayotis Thomopoulos, Deputy Governor, Bank of Greece

Jens Thomsen, Member of the Board, Danmarks Nationalbank

Jean-Claude Trichet, President, European Central Bank

Juan José Toribio, Director, IESE

José Uribe, Head of the Management Office, Banco de la República de Colombia

Pierre Van der Haegen, Director General of International and European Relations, European Central Bank

Félix Varela, Head of Research and International Economy, University of Alcalá

Manuel Varela, Emeritus Professor, University Complutense Madrid

Fernando Varela, Former Executive Director, International Monetary Fund

David Vegara, Secretary of State for the Economy

Jaume Ventura, Professor, University Pompeu Fabra

Pedro Pablo Villasante, Director General of Banking Supervision, Banco de España

José Viñals, Director General of International Affairs, Banco de España

Regine Wölfinger, Economist, European Central Bank

Foreword

Concerns over the major challenges the international monetary and financial system currently faces and the attendant debate on the policy-related and academic facets of the international financial architecture have arisen from the lessons imparted by the financial crises of recent years and from the need to redefine the international financial community’s strategies and strengthen crisis-prevention mechanisms. A new landmark in this connection has been the international conference Dollars, Debt and Deficits: Sixty years after Bretton Woods, which took place at the Banco de España headquarters on 14-15 June 2004. The conference was jointly organized by the Banco de España and the International Monetary Fund (IMF).

The conference commemorated the 60th anniversary of the Bretton Woods meetings in July 1944. These meetings were one of the most significant events for the world economy in the last century and gave rise to the birth of an economic, monetary and financial system that has played a crucial role in promoting economic and financial stability, improving global welfare, and alleviating poverty. Representatives from 45 countries met at Bretton Woods against the backdrop of a world economy devastated by war and marked by protectionist trade policies and unstable exchange rates. The foundations were laid there for a stable framework of economic cooperation and an international financial and monetary system, and two institutions which have proved pivotal for the attainment of these goals were created: the IMF and the International Bank for Reconstruction and Development, later the World Bank.

Spain’s growing ties with the Bretton Woods institutions reached a high in autumn 1994 when Madrid hosted the IMF/World Bank annual meetings, coinciding with the 50th anniversary of the agreements. Marking another pinnacle was the IMF’s obliging acceptance of the proposal to commemorate the 60th anniversary with the organization of an international conference at the Banco de España. Significantly, this has been one of the few occasions on which the IMF has decided to hold a meeting of this nature outside its Washington headquarters.

Conference preparations were set in train in December 2003, when the co-organizers made a call for papers to the academic community for contributions on economic development, policy measures and implications of debt sustainability, exchange rates and global imbalance in the capital account, debt and exchange rate crises, crisis-resolution strategies, the relationship between the adopted exchange rate regime and economic development, the link between fiscal development and exchange rate regimes, and regional integration and the main international currencies. The selection of contributions from among those received was by a committee made up of representatives from the IMF and the Banco de España. The committee was pleasantly surprised by the number and quality of the contributions submitted, ten of which were finally chosen. For the session chairs, discussants and expert panels, prestigious academics and expert staff from central banks, international agencies and economic research institutes were called upon. The outcome was a high-quality program that generated notable expectations about the conference, expectations which were more than fulfilled thanks to the calibre of the participants and the results of the debates. Among conference speakers and participants, a significant total of 27 countries were represented.

The conference was therefore an excellent opportunity to reflect on the major challenges currently facing the international monetary and financial system and on the future role of the Bretton Woods institutions. It has provided for better understanding of the development of and changes in the international financial architecture and has helped offer a perspective as to how a global response should be designed in the future to avert the perverse effects of crises on the world economy. The conference also allowed a fruitful exchange of views on exchange rate fluctuations in an increasingly integrated world economy, the consequences of political uncertainty and other issues relating to exchange rates, and the term structure of interest rates and the sustainability of public debt.

The main contributions and debates turned on the dynamics of international disequilibria, such as the US external deficit, the effects of exchange rate fluctuations, the impact of uncertainty on public and private external debt, the role of the IMF and of international financial institutions in reducing emerging economies’ foreign currency financing needs, and the prospects for the international financial architecture in light of the emergence of new international lending instruments and mechanisms.

In sum, the tight but stimulating conference agenda highlighted once again the need for national authorities and international financial institutions to coordinate their work in areas of common interest, harnessing their experience and comparative advantages, and providing the degree of technical rigour needed to address global financial problems.

Rodrigo de Rato

IMF Managing Director

Jaime Caruana

Governor of the Bank of Spain

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