Events lead me to conclude that the status quo applies here. Two examples support this view.

On the positive side, dialogue and communications remain critically important. The US Federal Reserve has made considerable effort to communicate its thinking about the state of the US economy and the implications for monetary policy. Its “data dependence” message has been made clear. While for some this may not map as clear a policy path as they might wish, it has given considerable heads up to countries and monetary authorities, including in developing economies, to prepare for an eventual increase in US interest rates.

While technically not a form of international monetary “cooperation”, the Fed’s efforts to be clear about its thinking provides important input to others as they think through and address their respective challenges.

Countering this is the continued muddling of the role of the IMF in Europe. Debt sustainability remains a critical issue, and despite the IMF’s clear analysis about debt sustainability in Greece its political presence continues to undermine its credibility, and that of global governance reform more generally.

Here I would argue for the status quo based on events of the past year. While one can point to continued momentum in a number of important areas, slippage or less progress than expected can be pointed to in other areas.

Broadly speaking, the work plan of the G20 and the FSB has had two streams: (i) enhancing the resilience of the global financial system; and (ii) having a credible resolution mechanism.

A great deal has been done since 2008 to strengthen the resilience of the global financial system, making it much safer as a result. But while the probability that a systemic financial institution will fail has been reduced, we have not eliminated it. A number of cross-border issues remain unresolved, and there is need for greater confidence that countries will live up to their commitments. We also need to ensure that there is sufficient total loss-absorbing capacity (TLAC) in the system.

Similarly, the resilience of core markets, and related cross-border issues, is far from complete. And the importance of regulation and supervision of the shadow-banking system has really only just begun to be tackled.
China in all this remains an unanswered question. Its shadow-banking system operates quite differently from that, say, in North America. And more generally, gauging the resilience of the Chinese financial system is far from transparent.