Fund lending The areas of activity that I have just mentioned involve in the first place the long-term prevention of crises and the promotion of trade and growth. They account for the major part of the IMF’s work. However, the IMF also has the role of fire brigade in the international financial system. Roughly, financial problems occur in four or five countries each year. This often includes difficulties for these countries to handle their foreign payments - their foreign exchange reserve runs low since imports are greater than exports, and there is insufficient foreign capital inflow to bridge the gap. In such a situation, the country can apply to the IMF for a loan. A team of economists is then quickly put together and sent to the country to assess how severe the crisis is and what has to be done to regain control over the situation. Together with the country’s government, the IMF staff rapidly creates an economic reform programme that runs over a couple of years. The purpose of this programme is to establish confidence in the country’s economy and in this way turn the outflow of capital to an inflow, so that the country can regain balance in its payments. During the period that the country is undergoing the programme, it can also borrow limited amounts from the IMF to assist in covering parts of its deficit. The IMF’s lending is thus relatively short-term.
Another important issue to be discussed is how the effects of commodity prices on inflation, economic activity and exchange rates differ with respect to different monetary policy regimes. Another important issue is the interaction among different economic policies vis-a-vis the commodity price fluctuations. Distinguished guests, Studies included in the program will substantially contribute to the understanding of the commodity price dynamics and the policy responses against the macroeconomic effects of these dynamics. In this context, I would like to thank the organization committee for their efforts for this conference program which gathers very interesting and enlightening studies. I also believe that the conference will provide a platform which will be highly beneficial for the exchange of views among participants. Thank you very much in advance to all participants for their contribution. Now, I would like to give the floor to Pierre-Olivier Gourinchas, professor of economics at California University-Berkeley and the chief editor of the IMF Economic Review journal to open the first session. 2  BIS central bankers’ speeches