In a board room at the New York Stock Exchange, Blair spoke to 24 executives and other officials, and according to the New York Times, urged them to think big - claiming that "... we should not be afraid to think radically and fundamentally." The IMF and the World Bank are institutions created during the Bretton Woods conference 54 years ago. Their procedures were developed in a world of fixed exchange rates and capital controls, at a time when capital flows were significantly smaller than today. But the interdependent global economy that has done nothing but grow within the last few decades is in dire need of new rules and regulations to help guide its development.
International non-governmental organizations like the IMF and the World Bank are needed and should be maintained. But to be effective, new procedures should be adopted. To date, the rescuing of Mexico's financial crisis is one of very few success stories involving these two organizations. More recently, the IMF has agreed to loan Russia billions of dollars to help stop what could turn out to be a massive depression. The value of the ruble already fell sharply and the future of the government is uncertain. Domestically, Russia is next to helpless, and institutions like the IMF need to use its resources to provide some short-term liquidation, if not long-term reforms.
But it is that exact theory of short-term help that causes problems with some nations throughout the world. First, the leading contributor to the IMF is the United States, creating an air of unilateral help rather than international cooperation. Second, without serious consideration of long-term reforms by failing economies, the United States is growing less ready to offer money to seemingly unsuccessful organizations. Just last week, members of Congress blocked a move by President Clinton to increase funding to the IMF.
Blair is currently the chairman of the Group of Seven leading industrial nations - the United States, Britain, France, Germany, Japan, Italy and Canada - and is considering calling a meeting of the group's governmental leaders to push for reforms. Blair's proposals call for greater openness, transparency and improved supervision and regulation of monetary loans.
While these steps are necessary to create an effective and successful international economic fund, reforms should not stop there. When economies are failing, money is not the only answer - reforms, both economic and political, are also needed. If the world is to begin a serious endeavor to help ailing international economies, money, but more importantly reform, is the key to success.