“The Euro crisis drags on—more than three years after its inception. Member countries along with the IMF did a much better job in addressing the Asian crisis, and the rapid return to growth was the reward. The central problem was the EU’s unwillingness to take care of the sources of the problems quickly and the IMF’s reluctance to push the EU harder to do so. In the past year, the IMF has taken tentative steps toward insisting that the Europeans take a more realistic approach at least in Greece, but still continues to be tolerant of an unfunded program that leaves very significant and potentially destabilizing uncertainty in markets. True progress, that will make the IMF and the framework for global cooperation, requires a framework that bolsters the IMF’s ability to withstand inappropriate political pressure from its largest members and better procedures for resolving severe sovereign debt crises.

The effectiveness of IMF surveillance relies on continuing efforts to improve the IMF’s ability to flag selectively the most risky circumstances and policies. That said, this process is an art, not a science. Crises will happen no matter how good IMF is at anticipating crises and it is in determining how to secure IMF involvement early and effectively that the focus should lie.”