by Jane Sneddon Little and Giovanni P. Olivei
November/December 1999

When the Federal Reserve Bank of Boston chose "Rethinking the International Monetary System" as the topic for its 43rd Economic Conference, it was clear that the worst international financial crisis in decades had caused tremors within the economics profession and the policymaking establishment. The miracle countries of Asia had suffered sharp currency devaluation and deep economic downturns, the turmoil had spilled over into Russia and Latin America, and a severe liquidity crisis had briefly threatened banking systems in the advanced countries. Not surprisingly, then, the events of the 1990s provoked many proposals for reform. But these proposals reflected differing, even contradictory views about the underlying problems and their solutions, and they did not always reveal a systemic approach to reform.

In hopes of clarifying some of these issues, the Bank asked conference participants to examine key parts of current international arrangements: the eclectic exchange rate system, international capital markets, the international lender of last resort, and policy coordination. We also asked them to consider how these critical components interact. We hoped that adopting a systemic approach would help to narrow the differences among economic policymakers and identify priorities for reform. Our ultimate goal was to define ways to enhance the benefits of global integration, while limiting its costs. This article summarizes the participants' answers to our questions.

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