David Robinson, Deputy Director of Western Hemisphere Department of IMF, participated in The Return of History: From Consensus to Crisis CASE International Conference as a key note speaker. Robinson argues that the rise of imbalances, mounting up from 1997, involved a chain of bubbles – property and financial market burst in Asia, IT bubble in the USA and the recent largest house and financial market bursts.  The underlining forces behind the rising bubbles were the IT revolution, export oriented policies of developing countries and contributing and ultimately detrimental policy responses from both deficit and surplus countries. Robinson claims that the recent crisis cannot be understood without the reference to the global imbalances due to the commonality of the factors underpinning them.  Referencing Obstfeld and Rogoff, Robinson says that the securitization boom, lax interest rate policy and reserves accumulation by Emerging Asia in the environment of weak regulation and supervision, facilitated the global financial crisis.

As global imbalances continue to pose challenges, Robinson advocates better management of capital flows and a coordinated multilateral policy.   The IMF should undertake an increasing role to provide new facilities, liquidity lines as well as contingent general Special Drawing Rights allocation.  Robinson underlined that these changes require internal reform of the IMF governance, implying larger quote allocation for developing country members.

[video presentation]
[power point presentation]