Chapter VI. Ignite a New Era of Global Economic Growth through Free Markets and Free Trade
Section C. The Way Ahead - 3. Reforming the International Financial System to Ensure Stability and Growth
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In our interconnected world, stable and open financial markets are an essential feature of
a prosperous global economy. We will work to improve the stability and openness of
markets by:
· Promoting Growth-Oriented Economic Policies Worldwide. Sound policies in the
United States have helped drive much international growth. We cannot be the only
source of strength, however. We will work with the world's other major economies,
including the EU and Japan, to promote structural reforms that open their markets and
increase productivity in their nations and across the world.
· Encouraging Adoption of Flexible Exchange Rates and Open Markets for
Financial Services. The United States will help emerging economies make the
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transition to the flexible exchange rates appropriate for major economies. In
particular, we will continue to urge China to meet its own commitment to a market-
based, flexible exchange rate regime. We will also promote more open financial
service markets, which encourage stable and sound financial practices.
· Strengthening International Financial Institutions. At the dawn of a previous era
6 decades ago, the United States championed the creation of the World Bank and the
International Monetary Fund (IMF). These institutions were instrumental in the
development of the global economy and an expansion of prosperity unprecedented in
world history. They remain vital today, but must adapt to new realities:
· For the World Bank and regional development banks, we will encourage greater
emphasis on investments in the private sector. We will urge more consideration
of economic freedom, governance, and measurable results in allocating funds.
We will promote an increased use of grants to relieve the burden of unsustainable
debt.
· For the IMF, we will seek to refocus it on its core mission: international financial
stability. This means strengthening the IMF's ability to monitor the financial
system to prevent crises before they happen. If crises occur, the IMF's response
must reinforce each country's responsibility for its own economic choices. A
refocused IMF will strengthen market institutions and market discipline over
financial decisions, helping to promote a stable and prosperous global economy.
By doing so, over time markets and the private sector can supplant the need for
the IMF to perform in its current role.
· Building Local Capital Markets and the Formal Economy in the Developing
World. The first place that small businesses in developing countries turn to for
resources is their own domestic markets. Unfortunately, in too many countries these
resources are unavailable due to weak financial systems, a lack of property rights, and
the diversion of economic activity away from the formal economy into the black
market. The United States will work with these countries to develop and strengthen
local capital markets and reduce the black market. This will provide more resources
to helping the public sector govern effectively and the private sector grow and
prosper.
· Creating a More Transparent, Accountable, and Secure International Financial
System. The United States has worked with public and private partners to help
secure the international financial system against abuse by criminals, terrorists, money
launderers, and corrupt political leaders. We will continue to use international venues
like the Financial Action Task Force to ensure that this global system is transparent
and protected from abuse by tainted capital. We must also develop new tools that
allow us to detect, disrupt, and isolate rogue financial players and gatekeepers.
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