International Monetary Fund (IMF) Managing Director Christine Lagarde stressed Friday that "the rate and reach of change will be great" over the next generation thus "the needs of our members will change. So too must the Fund." In a speech at the plenary session of the IMF-World Bank meetings, Lagarde stressed that the fund "must be flexible in its approach and focused on its core goals to best serve you, our members.
"Flexibility, focus, service; those are our guiding principles," she affirmed.
She noted that the Great Recession "generated unprecedented challenges," during which the fund responded in an "unprecedented way," partly through the "sheer scale of our financial support: we have provided more than USD 300 billion to help ease the burden of adjustment for our member countries in need.
"Now, as global growth dynamics are changing, it is critical that we continue to customize our advice to countries needs, always sensitive to the impact on growth and on people," she remarked.
She indicated that the IMF has been "giving some thought to the long-term trends that might shape the next generation," among the ones she mentioned are "a more multi polar world; a more financially integrated world; and what I would describe as the 'new frontiers of risk.' "Today, the world economy is not simply connected, it is hyper connected. This will propel financial integration on a scale not yet quantified, and to corners of the world not yet reached," she added.
She said that "as emerging and developing countries grow and converge, their financial interconnections will become deeper and more complex.
"Deeper integration will fuel growth, but not without risk. Experience teaches us an important lesson: greater financial integration raises the probability and size of financial crises," she added.
The IMF chief stressed that "the capacity to prevent and resolve crises will be vital." She noted that "this is especially true given the new frontiers of risk that our membership will face," and that the "we at the Fund are sharpening our focus on their economic effects." According to Lagarde, "the Funds comparative advantage is to bring our macro-critical perspective to bear. Maintaining that focus and adapting our approach is what has made the IMF an effective institution in the past.
"Retaining that focus and adapting our approach will enable us to support our membership effectively in the future," she added.