Better accountability

Let me turn to my third and last principle for the new global economy: better accountability. The new generation demands transparency. They demand good governance. We must deliver.

Just look at the role of information technology in forcing change. It was the citizen power of social media that sparked a peoples’ transformation in the Middle East, put pressure on U.S. policymakers to compromise on the fiscal cliff, and prompted Chinese policymakers to publish frequent updates of pollution levels.

These forces for greater accountability will only get stronger. Of course, governments can try to push back and restrict access to information technology. But this is like King Canute ordering the tide not to come in!

Accountability is really a two-way street—institutions must be accountable to citizens, but citizens must also have the knowledge, education, and training needed to hold them accountable. It is mutual responsibility.

What does this all mean for economic life—in the public sector, the private sector, and international institutions too?

Beginning with the public sector, we have learned that good governance is the bedrock of economic success. Without strong institutions, good policies cannot be developed and implemented.

Zero tolerance for corruption must be foundational. The state must be the servant rather than the master of the people—meeting their basic needs and providing an enabling environment for the private sector to thrive.

But the private sector also needs to be accountable. The goal of the private sector cannot be only profit; it must also be to add value, create jobs, develop the new ideas that drive an economy forward. Vested interests and arbitrage typically hinder the accountability principle.

One has in mind the financial sector, which turned out to be insufficiently accountable—to its clients, its shareholders, and to society in general. As we all know, the global economic crisis was, in many respects, a governance crisis originating in the financial sector. It hid too much activity in murky and dark corners, and put its own short-term gain ahead of supporting the real economy.

As Plato said long ago, “Excess generally causes reaction, and produces a change in the opposite direction.”

Frankly, we need to see more of that change in 2013. Finishing the job of financial sector reform must be a priority. We can already see too many signs of waning commitment—dilution of reforms, delays in implementation, inconsistency of approaches. And we can see the risks—a further weakening in capital and liquidity standards; and not enough progress on key areas like cross-border resolution, shadow banking, and derivatives. We must also move in the direction of more prudent compensation practices.

Ultimately, again, this is all about accountability: we need a financial sector that is accountable to the real economy—one that adds value, not destroys it.

One final point on accountability: it also relates to international financial institutions like the IMF. We too must respond to the new imperative for greater accountability.


And so we are trying to become more open and transparent, reaching out to all stakeholders. Recognizing the profound changes in the global economy, we are pushing ahead with our governance reforms so that all countries have a fair stake in the running of the institution.

For at the end of the day, our job too is service: for our 188 member countries. We must be accountable to them—but even more than that, to the citizens of those countries who now hold us, rightly, to a new standard of effectiveness.

Conclusion: A New Moment in History

Let me conclude. I believe that if we continue to act, 2013 will be a defining year in terms of finally getting beyond the crisis. But more than that, I believe we are standing in the antechamber of a new global economy, marked by rapidly shifting circumstances and new modes of thinking.

Yes, this new economy will be geographically different, driven more by the dynamic emerging markets and developing countries. But it will also be generationally different, shaped by different values and principles.

What we need today is a “new moment in history” that embraces the values of a new era—more openness and cooperation between nations, more inclusion and solidarity among peoples, and stronger accountability of those responsible for the global economy. That includes many of the people here in this room.

In the final analysis, there are no easy answers to the big burning questions like the sources of future growth and the harnessing of technology to benefit the entire planet. But we can at least say that, together, we are grappling with the right issues—with our intelligence, goodwill, and courage.

Let me assure you that the IMF will always be ready to help in whatever way we can.

Thank you.

Date: 2014-12-29; view: 725