Too much confidence that open markets will always deliver economic and financial stability increases the risk of volatile episodes that hurt jobs and growth. But too much focus on managing short-run pressures risks thwarting the medium- to long-run adjustments that are fundamental to productivity and rising standards of living.
Finding the right balance between managing short-run pressures and ensuring steady progress toward liberalization is the crucial task of the international monetary and financial system. While much progress has been made in the 50 years since the end of Bretton Woods, achieving this balance remains elusive. And looking ahead, it will not get easier or less critical.