The Outlook for International Monetary System Reform in 2011: A Preliminary Report

Reform of the international monetary system was placed on the agenda of the Group of 20 (G-20) a year ago at the initiative of the incoming French leadership of the G-20. On November 4, 2011 in Cannes, France, the G-20 leaders will announce their conclusions and agreements after a year and half of intense dialogue and debate. The discussions cover (1) surveillance of the global economy and financial system, (2) international lender of last resort mechanisms, (3) capital flows and financial pressures, (4) the currency and reserve asset system, and (5) governance of the international monetary system. While the governance issue, in the form of governance of the International Monetary Fund (IMF), is not explicitly on the agenda of the G-20 leaders, the resignation of Dominique Strauss-Kahn as managing director of the IMF has placed it on the agenda with high priority. Based on the evidence to date, Truman expects that by the end of 2011, the result will produce a barely passing grade on substance—below B on the inflated scale of grades today—but an A for effort. As long as the process achieves the A for effort via a thorough examination of the full range of reform issues, the shortfall on substance is not crucial, and he welcomes being proved wrong on substance. More would be desirable, but the international monetary system will continue to evolve.