In this environment, we must diligently pursue policy coordination at the global level. To achieve an orderly realignment of consumption and investment worldwide, policies that boost investment in one part of the world should match policies that boost consumption in other parts.
In particular, advanced economies should implement fundamental productivity-enhancing reforms, the eurozone should strengthen the currency union, and emerging market and developing economies should boost their domestic sources of growth. And these policies should be consistent with fiscal and external stability. Moreover, financial-sector policies and regulatory frameworks should be coordinated at the global level, in order to design and implement consensus-based rules – thereby addressing the problems posed by very large, global institutions that are considered too big or too complex to fail.
Only with such global coordination can we reduce, and possibly eliminate, economic instability and disorderly adjustments both at home and abroad, even as we seek to maximize the benefits of the inevitable changes in the global economy.Project Syndicate
The Global Economy’s New Path
Zhu Min | Deputy Managing Director of the IMF and a former deputy governor of the Peoples’ Bank of China (2009-2010)