Capital account liberalisation led to entrust international financial markets with the “disciplining” function. When it became apparent that the discipline could often lead to abrupt capital flows reversal and crisis, the international community attempted to strengthen the IMF surveillance and develop its facilities so as to pre-empt such shocks and make them more manageable. That is, basically, where we are today. Everything must be done to ensure that IMF surveillance works. But, like any “disciplinary” approach, it meets with three essential difficulties: first, diverging interests between countries; second, enforcement problems (the IMF has naturally more leverage on countries that need its help than on others). Finally there is a perception of asymmetry in IMF surveillance; it may be compounded by a more fundamental and natural asymmetry between surplus and deficit countries, when it comes to implementing adjustment measures. And, some would say, there might also be a de facto asymmetry between reserve and non reserve currencies, although, as I shall mention later, the situation is more subtle. These difficulties were apparent during the last part of the 20th century. But what makes the “disciplinary” approach almost impracticable today are the changes that have occurred in the world at the turn of the 21st century. The world today stands in stark contrast with both the Bretton Woods era and the period that followed immediately:   The first – and most obvious – difference is the number of countries that are active participants to the system and have a stake in its functioning.
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