Surveillance and crisis prevention  Let first me turn to crisis prevention. I shall start with a general remark. Surveillance is the backbone of crisis prevention. However, for surveillance to be effective, it must not only be correct, it must also be implemented. Implementing stability-oriented policies and efficiently monitoring domestic markets and institutions is the primary responsibility of the member country. The Fund can only help countries that are willing to help themselves. As any Argentinean would say, it takes two to tango. The Fund’s role is limited to providing the best possible objective advice built upon the best possible analytical expertise. This is not to say, of course, that Fund advice is always correct or appropriate. Though Fund staff is highly qualified, it can make mistakes. Indeed, mistakes have been made most often due to a poor understanding of the country-specific circumstances. It is therefore crucial to maintain a high-quality dialogue between authorities and staff at all times. The more the interaction between a country and the Fund is frank, constructive and based on mutual trust, the bigger the chances are of a valuable and usable outcome. Though Switzerland joined the IMF in 1992 only, we can already record some very good experiences in this regard. Most appreciated, for instance, were the discussions that took place between our experts at the Swiss National Bank and Fund staff in the period of the formulation of the new monetary concept that was introduced in 2000.
Under the circumstances, it should come as no surprise that Switzerland fully supports the IMF in attaching the highest priority to stability and crisis prevention. The main tool in this endeavour is clearly surveillance. Surveillance remains the most important activity of the Fund as its first line of defense against turmoil. However, this activity is hardly known to the wider public. Unlike an agreement on a multi-billion rescue package, efforts to prevent a financial crisis never hit the headlines. Surveillance is relatively unknown, probably also because it is a very complex animal, hard to explain, and with dozens of connotations. I have neither the time nor the desire to elaborate on all the elements of present-day Fund surveillance. However I believe that some points are worth emphasizing. In the first part of my presentation I shall begin with some remarks on transparency, both in the context of the Fund and with regard to its role in promoting market discipline. I shall then elaborate a bit on surveillance in financial markets. In the second part of my presentation, I shall take up issues linked to crisis resolution. However, much effort goes into crisis prevention, crises cannot be completely ruled out in an open and dynamic global economy; the IMF, therefore, needs to be and to remain an efficient “fire-fighter”. I shall elaborate on this “fire fighter” role of the Fund, on the limits of its action, and on what is necessary to preserve efficiency and credibility in this context. BIS Review 69/2004  1  2.