What are the purposes of international economic organizations? select three options.

9.3.3 International financial institutions

The international financial institutions (the IMF, the World Bank, and other multilateral development banks) and governments of the United States and other large economies (usually in the form of the G-7) are heavily involved in “managing” financial crises.171

The IMF is not a full-fledged lender of last resort, although some have proposed that it should be.172 It does not contribute enough money to play this role in crises, even in the high-profile rescue programs where the loans are a large multiple of the country's quota. Usually the IMF is viewed as applying a “Good Housekeeping seal of approval,” where it vouches for the remedial actions to which the country has committed.

IMF conditionality has been severely criticized.173 There is a broad empirical literature on the effectiveness of conditional IMF lending.174 The better studies have relied on large cross-country samples that allow for the application of standard statistical techniques to test for program effectiveness, avoiding the difficulties associated with trying to generalize from the finding of a few case studies. The overall conclusion of such studies seems to be that IMF programs and IMF conditionality may have on balance a positive impact on key measures of economic performance. Such assessments suggest that IMF programs result in improvements in the current account balance and the overall balance of payments.175

The impact of IMF programs on growth and inflation is less clear. The first round of studies failed to find any improvement in these variables. Subsequent studies suggest that IMF programs result in lower inflation.176 The impact of IMF programs on growth is more ambiguous. Results on short-run growth are mixed; some studies find that implementation of IMF programs leads to an immediate improvement in growth,177 while other studies find a negative short-run effect.178 Studies that look at a longer time horizon, however, tend to show a revival of growth.179 This is to be expected. Countries entering into IMF programs will often implement policy adjustments that have the immediate impact of reducing demand, but could ultimately create the basis for sustained growth. The structural reforms embedded in IMF programs inherently take time to improve economic performance. Finally, the crisis that led to the IMF program, not the IMF program itself, is often responsible for an immediate fall in growth.

Despite such academic conclusions, there was a movement away from strict conditionality subsequent to the emerging market crises of the 1990s. In part, the new view increasingly became that the IMF could not force a country to follow the macroeconomic policy conditions written into an agreement, if the deep political forces within the country would ultimately reject the policies.180 It is necessary for the local government to “take ownership” of the reforms.181 One proposal to deal with this situation was the Contingent Credit Line, which is a lending facility that screens for the policy conditions ex ante, and then unconditionally ensures the country against external financial turmoil ex post. The facility was reborn under the name Flexible Credit Line in the 2008–2009 financial crisis with less onerous conditionality. Most emerging market countries managed to avoid borrowing from the IMF this time, with the exception of some, particularly in Eastern Europe, that were in desperate condition.

Some critics worry that lending programs by the international financial institutions and G-7 or other major governments create moral hazard, and that debtor countries and their creditors have little incentive to take care because they know they will be rescued. Some even claim that this international moral hazard is the main reason for crises, that the international financial system would operate fine if it were not for such meddling by public institutions.182

There is a simple way to demonstrate that moral hazard arising from international bailouts cannot be the primary market failure. Under a neoclassical model, capital would flow from rich high capital/labor countries to lower income low capital/labor countries; for example, from the United States to China. Instead it often flows the opposite way, as already noted. Even during the peaks of the lending booms, the inflows are less than would be predicted by an imperfection-free neoclassical model.183 Therefore any moral hazard incentive toward greater capital flows created by the international financial institutions must be less than the various market failures that inhibit capital flows.

Provision of a supranational reserve asset

Systematic problems might be mitigated by international financial institutions that are endowed to create outside liquidity in a crisis. However, any lender of last resort creates moral hazard problems if support is expected. The IMF might be endowed with additional financial resources to be able to credibly assist countries during crises. This might be accomplished by the creation of new SDRs. In fact, SDRs were created in 1969 as a response to the lack of safe reserve assets under the Bretton Woods system of fixed exchange rates. To separate the creation of SDRs from political pressures, their increase could be automatized with SDRs increasing with worldwide real output growth.3 However, the use of SDRs as reserve assets also contains pitfalls: SDRs are only backed by the credibility and liquidity of the IMF. A national currency, however, is at least backed by GDP of the issuing country.

Intellectual Background

Our understanding of the functioning and effects of IFIs generally has its roots in the modern scholarly study of international institutions and in the early 1980s study of international organizations (IOs). Prior to the early 1980s, the study of IOs was quite policy-oriented and descriptive and lacked an overarching analytical framework. This lack of a theoretical foundation meant that, although individual studies generated strong insights, they did not cumulate to create a coherent picture of, or debate about the role of, IOs in the world economy. This situation changed in the early 1980s, when new work cast international institutions in a new light, suggesting a novel explanatory framework for studying them. The puzzle that motivated this research began with two observations: first, that international economic cooperation in the 1970s was stable in spite of substantial shifts in the distribution of international economic power, and second, that organizations such as the Bretton Woods institutions and the GATT were prominent features of the economic landscape. These two observations were connected to one another: the existence of institutions and IOs explained the persistence of economic cooperation.

For states to be able to cooperate, they must overcome a range of collective-action problems. No external enforcement exists in the international economy, so any agreements must be self-enforcing. This means that states must find ways to avoid temptations to cheat, for example, by reneging on agreements to encourage trade by erecting protectionist barriers. Avoiding such temptations requires high-quality information about the actions and preferences of other states, and about the likely consequences of cheating on agreements. In addition, states must coordinate their actions, for example, agreeing on common technological and public health standards. IOs provide forums in which states can mitigate collective-action problems that threaten stable patterns of cooperation. IOs can perform monitoring functions and provide assurance that others are living up to the terms of their commitments. They are forums for negotiating to resolve coordination problems and to learn about the preferences and constraints facing other governments. IOs create structures for enforcement and dispute resolution, although actual enforcement powers typically remain in the hands of member states.

Through these functions, IOs become a valuable foundation for cooperation and for the global economy. IOs enable more resilient patterns of cooperation in the face of underlying shifts in economic power and interests. The initial work applying this ‘contractual’ view of institutions concentrated on international regimes, which, in turn, are defined as sets of principles, norms, rules, and decision-making procedures. One advantage of examining regimes, as compared to the earlier focus on individual IOs, is that this shift allows researchers to consider informal institutions as well as formalized bodies. While in more recent years much attention has shifted back to formal IOs, the understanding that informal bodies of norms sustain cooperation in the global economy underlies today's work on individual organizations.

While research on international regimes represented a major step forward in the analysis of international institutions, it was subject to criticism from a number of perspectives. It may have moved too far from the analysis of specific IOs, thus missing some important internal organizational dynamics. The concept of regimes was broadly defined, and regimes were difficult to observe independent of their effects. Consequently, much effort went into determining whether or not regimes actually existed in various issue areas. Further research explored whether changes in patterns of behavior reflected changes within regimes or of regimes. It is not clear that these descriptive debates added a great deal to our understanding of the causes and consequences of institutions in the international environment.

Other major weaknesses of the literature included its state-centric focus and neglect of domestic politics. IOs may fail in their attempts to manage difficult problems in international relations. The inability of IOs to resolve serious conflict could reflect not just random mistakes but a systematic pattern of failure. IOs could even have perverse effects, exacerbating conflict rather than mitigating it. For these reasons, it may be unwise to rely too heavily on formal IOs to manage international relations. In addition, the regime literature may neglect the role of political leadership. Many of these criticisms have been echoed in recent years in the analysis of IFIs.

One of the most telling critiques of the regime literature is that it was too focused on market failures. The failures involve instances where all could potentially benefit from mutual cooperation, but where collective-action problems such as high transaction costs prohibit states from reaching the ‘Pareto frontier.’ For example, if we consider cooperative communications efforts, states seem to have little trouble reaching the Pareto frontier. States found it relatively easy to identify the set of bargains that would benefit all participants. Distributional conflict trapped them; they found themselves having to choose among bargains that benefited some while harming others.

Thus, the most significant problem plaguing efforts at international cooperation was not providing a good contractual environment to overcome transaction-cost problems such as informational limitations, but a coordination problem in which states disagreed over which of the multiple Pareto-efficient equilibria they preferred. This insight has led to a revision of early work on regimes, which claimed that coordination problems would be relatively easy to solve. A new focus on how institutions might aid in resolving coordination problems has added depth to our understanding of IOs' functions.

The theory of international institutions became deeper and richer in the 1990s. Scholars brought the concept of multilateralism back into the study of institutions. Multilateralism may be defined, simply, as cooperation among three or more states. A more elaborate definition indicates a set of norms that prescribed certain patterns of behavior, such as nondiscrimination. Either definition redirects attention to variation among types of institutions, a highly productive move for the field. Another debate arose regarding the problem of compliance with the rules of IOs and with international agreements more generally. The managerial school, representing primarily the views of legal scholars, argued that states generally wanted to comply with international rules and that variation in compliance was therefore not a compelling puzzle. Political scientists responded by noting that the managerial argument was plagued by selection bias: if states almost always complied with the rules, it was likely because they would only accept rules that demanded minimal changes in their patterns of behavior. The appropriate question, therefore, was not so much compliance, but rather how different structures of rules would promote far-reaching changes in behavior that left states open to exploitation, or ‘deep cooperation.’

Interestingly, both the managerial and contractual schools agreed on the conclusion that variation in patterns of compliance was not a terribly important or interesting question, although they came to this conclusion by different paths. The managerial school argued that little variation in compliance could be observed because states are obliged to comply. The formal analysis of compliance argued that minimal observed variation in compliance simply reflected the fact that states are unlikely to make commitments on which they intend to renege. Nevertheless, empirical research on variation in compliance has continued, leading to some intriguing findings. For example, human rights treaties lead to greater compliance in situations where they lead to the mobilization of domestic groups who share the goals of the treaty, and lead to more government respect for human rights in areas including women's rights and nonuse of torture.

Other theoretical developments focus on the form and design of IOs. One body of work asks why IOs are becoming more ‘legalized’: they more often incorporate legalistic features such as third-party dispute resolution mechanisms. Researchers have begun to explore the advantages and possible disadvantages of legalization in promoting international cooperation.

Another body of work focuses on design principles for IOs. Starting from the assumption that IOs are designed to resolve collective-action problems, analysts have derived a number of hypotheses about the form of IOs. For example, if states design an IO to reduce the transaction costs of monitoring members' behavior, we would expect the organization to have relatively centralized monitoring capacities. Using logic like this, dimensions of IOs such as their centralization and autonomy from member states can be explained. It is important to note that the typical IO constitutes only one point on a wide spectrum of forms of international organization, ranging from complete anarchy to hierarchical organization, the latter exemplified by empires. A related question is why states sometimes cooperate informally, while at other times they choose to create formal IOs. The answer to this puzzle likely lies in transaction costs and trade-offs between autonomy and the benefits of commitment.

Overall, these developments in the study of international institutions provide a firm foundation for more specialized studies of IFIs. They suggest that one of the first questions to be asked when studying a particular organization is to ask about the problems it was designed to address. An understanding of such issues then leads to predictions about the form and functioning of the organization and about its effects on economic flows and conditions.

7 Economic and Political Liberalization

The unmistakable economic stagnation and symptoms of state crisis drew the international financial institutions into the fray, at a moment when newly dominant political economy perspectives in the Western world called for far-reaching curtailment of the orbit of state action: privatization, deregulation, budgetary austerity, and rigor. Although a need for economic reform was acknowledged on all sides, deep divergences existed on the diagnosis of the core causes, and appropriate remedies. The ‘Washington consensus’ held that the explanations lay mainly in flawed domestic policies, while much African opinion, both official and scholarly, believed the root causes lay in the unjust operation of the international economy. The international financial institutions developed a standard package of ‘structural adjustment programs,’ holding the upper hand in the bargaining. However, these formulas were only fitfully applied, producing uneven results and strong domestic disapproval for what critics argued were their negative social consequences. The dilemmas of structural adjustment define an important fraction of African political studies of the 1980s and 1990s (Callaghy and Ravenhill 1993).

The failure of reform to reverse economic decline in the 1980s led a growing number of voices to suggest that the underlying flaw lay in the patrimonial autocracies which continued to rule. Only political liberalization could empower an awakening civil society to discipline the state; accountability, transparency, and responsiveness necessitated democratization. The evaporating legitimacy of aging incumbents, and their shrinking capacity to sustain prebendal rule from declining state resources, reduced their capacity to resist political opening. The remarkable spectacle of the fall of the Berlin wall in 1989, and collapse of the Soviet Union in 1991, resonated powerfully. Leading Western donors now insisted on political reform as a condition for additional economic assistance.

The powerful interaction of internal and external pressures, and the contagious effects of the strongly interactive African regional political arena, proved irresistible. Democratization dominated the political scene in the 1990s, both on the ground and in the realm of African political study. Political opening in Africa formed part of a much larger ‘third wave’ of democracy, affecting Latin America, the former state socialist world, and parts of Asia as well. Initially, comparative political analysis focused upon the dynamics of transition itself, in a veritable moment of enthusiasm for the changes in course.

The initial impact was important; in at least a dozen states, long-incumbent rulers were driven from office by electoral means. However, in a larger number of other cases rulers developed the skills of managing competitive elections in a way to retain power. When attention turned to democratic consolidation in the later 1990s, the analytical mood was more somber. In the greater number of cases, only a partial political liberalization had occurred, captured in the analytical characterizations which emerged: ‘illiberal democracy,’ ‘semi-democracy,’ ‘virtual democracy.’ But now-dominant norms in the international system required a minimum of democratic presentability. Further, important changes had occurred in expanding political space for civil society, enlarging freedom of expression and media, and better observation of human rights. Democracy, however, was far from consolidated at the turn of the century (Bratton and van de Walle 1997, Joseph 1998).

Disconcerting new patterns appeared contemporaneous with the wave of democratization. A complete collapse of state authority occurred in Somalia and Liberia in 1991, and spread to some other countries. In a quarter of the states, significant zones of the country were in the hands of diverse militia, opening an era of ‘warlord politics’ (Reno 1998). In other countries such as Uganda, Ethiopia, and both Congos, insurgent bands from the periphery seized power. These events testified to a weakening of the fabric of governing, even a loss of statehood for some.

This enfeebled condition of numerous states, many if not most African scholars argued, emptied democratization of its meaning (e.g., Ake 1996). The externally imposed measures of structural adjustment had so compromised the effectiveness of states and their capacity to deliver valued services to the populace that the possibility of electoral competition had little value to the citizen. Democracy, in this view, was choiceless.

17.1 Introduction

The blockchain, the distributed shared ledger technology that underpins Bitcoin (Wood and Buchanan, 2015), is a consensus database that everybody can copy and access but by clever design cannot subvert: a permanent record of transactions that no-one can go back and change. The key characteristics of the blockchain that make it an interesting (but not the only) kind of shared ledger and that are particularly appealing to financial services markets are that it is distributed, decentralized, transparent, time-stamped, persistent, and verifiable (DuPont and Maurer, 2015).

Many people think that this technology has considerable promise for financial services beyond payments. Indeed, R3CEV consortium of 60 international financial institutions has announced multiple tests and developments of the technology and the noted Wall Street financier Blythe Masters has raised $60m1 for her Digital Asset Holdings blockchain-based business. The high hopes for the shared ledgers have also been evidenced by the Hyperledger project, Linux Foundation-led initiative with more than 80 members including IBM, Intel and Samsung SDS.2 Recently, UBS, BNY Mellon, Deutsche Bank, Icap and Santander in cooperation with the blockchain start-up Clearmatics have announced a “Utility Settlement Coin” initiative that is claimed to facilitate trading in digital assets.3

Chapter Summaries

Multilateral organizations are composed of sovereign governments. They may be regional, organized around a common issue or function, or global. International financial institutions (IFIs) are international banks composed of sovereign member states that use public money from the Member States to provide technical and financial support for developing countries. The United Nations is the organization most involved in the mitigation of, preparedness for, response to, and recovery from disasters around the world. It is considered the best equipped to do so because of its strong relationships with most countries, especially the developing countries where assistance is most needed. When disasters strike, the UN is one of the first organizations to mobilize, and it remains in the affected countries during the recovery period for many years after. The Consolidated Appeal Process is one way the UN garners international support for relief and reconstruction. In many regions, governments have formed smaller international organizations, many of which address risk, as well. The IFIs provide nations with low capital reserves funding in the aftermath of disasters recovery reconstruction. The World Bank is regarded as one of the largest sources of development assistance.

Moral Hazard

By mid-May 1998, Russia's economic report card looked weak: government debt on an unsustainable trajectory, low international liquidity, and weak growth prospects with the nonpayments system deeply entrenched. Market signals on devaluation and default had begun to turn sharply adverse (Figure 45.3). To make matters worse, the falling oil price was leading to a growing current account deficit (Table 45.5) and the real exchange rate had become overvalued (more on this in the section ‘Lessons and Insights from Russia 1998’). Yet Russia was able to increase its external debt by $16 billion between June 1 and the meltdown of August 17, as shown in Table 45.6, equal to 8% of the postcrisis GDP.

Table 45.6. Funds Received 1 June to 17 August 1998

Why were private investors willing to increase their exposure to Russia while at the same time signaling exceptionally high levels of devaluation and default risk? This was because of moral hazard in the expectation of a large bailout by the international financial institutions and possibly the G-7. Here is a telling quote from Reuters News Service from 10 June 1998:

Leading Russian shares nose-dived in early trade on Wednesday as nerves wore thin ahead of crucial government debt auctions later in the day and hopes faded for an announcement of concrete foreign support for markets. “We are in a potential meltdown situation at present … there is simply no confidence whatsoever,” said Regent European Securities' Chief Strategist Eric Kraus. “The market is profoundly disappointed by the failure of (German Chancellor Helmut) Kohl, the G7, or the IMF to provide any kind of support.”

A few days later, on June 18, Russia issued a 30-year Eurobond with a put-at-par after 10 years at a spread of 753 basis points, more than twice the spread on a Eurobond issued just 1 year earlier. It was so well-received that the size was increased from a planned $1.5 billion to $2.5 billion. This is what an investment analyst candidly noted: ‘Readers should recognize that this issue was sold – as all Russian debt has been in the past several months – essentially because investors believe that Russia will not be allowed to fail, rather than because its fundamentals are encouraging’.28

The preceding quotes indicate expectations of a large bailout on the ground that Russia was too nuclear to fail as opposed to having good economic fundamentals. Box 45.3 contains estimates put forward by various experts on the size of the needed rescue package. These influential commentators believed the ruble peg should be saved at all costs, and that Russia had a liquidity problem. A clear pattern emerged: the amounts Russia ‘needed’ increased as the days passed. The accompanying commentary betrayed little understanding of Russia's fiscal and growth fundamentals, completely inconsistent with the sharply rising bond spreads shown in Table 45.4.

Box 45.3

In their chapter on the Mussa Theorem, Jeanne and Zettelmeyer (2005) argue that IMF lending – and by extension, an IMF-led official rescue package – can never be a source of moral hazard so long as loans from the IMF are always repaid and actuarially priced to reflect the risk borne by the IMF, implying zero subsidy. In this case, IMF lending when rollover problems are present could well attract other lenders and lower interest rates – which would be efficient rather than connote moral hazard (a reference to the standard tests for moral hazard, which look at whether IMF lending leads to lower interest rates or larger volumes of private capital). But the authors concede that when fiscal problems are present and ‘gambles for resurrection’ are involved, moral hazard could result. This is precisely the category into which the Russian rescue program of July 1998 fell, as is evident from the mix of unsustainable debt dynamics, weak microfoundations for growth, an overvalued real exchange rate and the market evidently concurring by its pricing of the devaluation, and default risks on GKOs and Russia's Eurobonds.

II. Members

Implementation and Monitoring

An important element of the precrisis system of international standards involved monitoring their implementation. While primarily a domestic process, precrisis implementation was supported by a range of assistance mechanisms. Monitoring was mainly to take place at the international level through the IFIs, especially the IMF and World Bank. Specifically, the IMF worked through its annual Article IV consultations, and through Reports on the Observance of Standards and Codes (ROSCs) and Financial Sector Assessment Programmes (FSAPs) (the latter are conducted jointly with the World Bank where they relate to countries outside the OECD). The OECD and the FATF also engage in monitoring, with the FATF playing quite an influential role in the context of money laundering and terrorism financing. At a regional level, the regional development banks encourage implementation through their respective projects and reviews. In addition, regional economic associations may have a role – in some cases (e.g., the European Union) a very important one. At the bilateral level, some countries (especially the United States) are keen to support the implementation of certain standards – for example, those of the FATF. Finally, at the market level, the rating agencies have shown some interest in monitoring standards, though not to the extent of policy makers' hopes.

While this system appeared a reasonable approach following the Asian financial crisis (focusing on improving regulation in emerging market financial systems and enhancing harmonization in support of globalization), for a range of reasons, it has proven insufficient to prevent the 2008 global financial crisis. As a result, attention is now turning toward reform, focusing on both content of standards and their implementation.

Origins of the International Monetary Fund/World Bank Financial Sector Assessment Program

Crises call for reexamination of practices, and the crisis of the late 1990s were no exception. Globalization, with the challenges it spawns from ever more complex interactions among countries’ economies, exposes the need for stepped up collaboration among countries and international financial institutions and what has been called a new architecture. Sentiment for substantial reform had been building in high-level meetings of country officials. The G-7 Summit in June 1997 called for improved international coordination and cooperation in financial sector regulation and supervision just ahead of Thailand's devaluation of its currency that set off what was to become the East Asian financial crisis. A new international forum, the G-20, was established consisting of finance ministers and central bankers from 18 countries and representatives of the Bretton Woods institutions to broaden discussions on financial concerns to more countries, particularly to include those playing a crucial, and sometimes destabilizing, role in international financial markets. Canada called for the establishment of a ‘peer review’ system to improve financial sector supervision. The United Kingdom noted a need for better economic cooperation among nations citing roles for the International Monetary Fund (IMF) and the World Bank in providing surveillance and coordination.1

Participants at the 1997 IMF/World Bank Annual Meetings in Hong Kong discussed weaknesses in the financial sector particularly with respect to inadequate supervision standards and prudential regulations in emerging markets and urged an examination of the interventions of those institutions to better support a new international financial architecture. The Interim and the Development Committees stressed the importance of closer cooperation to help countries strengthen their financial systems and improve operational mechanisms, information sharing, and the dissemination of international standards.2 The G-7 Finance Ministers called for an increase in the ‘breadth and pace’ of efforts of collaboration by the Bank and the Fund and with relevant national and international regulatory and supervisory bodies to increase the likelihood of early detection of weaknesses in financial systems and improve crisis response, and to improve the design and delivery of financial sector reform programs, including technical assistance, for member countries.3

The Bank and the Fund, as Bretton Woods institutions, had been established at the end of World War II to create an ordered international monetary system. Their goals include improving the living standards of member countries. They approach those goals through different though inherently linked objectives: the Bank's focus is on improved quality of public spending, overall development and the reduction of poverty; the IMF's focus is on macroeconomic stability. Each institution's mandate has a direct bearing on the success of the others. The greater the overlap in mandates, the greater the need for collaboration. Their work in the financial sector is an area of overlap.

The East Asian financial crisis of 1997, in particular, demonstrated the significant and enduring costs to crisis-afflicted countries when inadequate collaboration resulted in conflicting advice. The Bank's and the Fund's responses to the crisis revealed tensions between stability and development concerns that led to some of the uncoordinated advice. The actions taken to resolve the immediate problems had a long-term impact that made achieving stability harder. The conditions the Fund set for the money it lent countries hit by a crisis of confidence in their currencies led to steeply increased interest rates and structural reforms. Joseph Stiglitz writes in his chapter ‘The East Asian Crisis’ in Globalization and Its Discontents: “As the crisis progressed, unemployment soared, GDP plummeted, banks closed. The unemployment rate was up fourfold in Korea, threefold in Thailand, tenfold in Indonesia … In 1998, GDP in Indonesia fell by 13.1%, in Korea by 6.7%, and in Thailand by 10.8%. Three years after the crisis, Indonesia's GDP was still 7.5% below that before the crisis, Thailand's 2.3% lower.”4 Such precipitous declines in growth wiped out progress in poverty reduction that was the Bank's agenda.

These tensions formed the backdrop for a push for closer collaboration to coordinate policy advice and rationalize resource use by the two institutions.

A joint paper presented to the Bank and Fund boards in Septembers 1998 called for the establishment of a high-level committee that would coordinate work in the financial sector.5 That committee, the Financial Sector Liaison Committee (FSLC), initially focused on facilitating coordination in three areas: (1) work programs in countries facing important financial sector issues; (2) the development of guidelines and procedures for sharing documents and confidential information; and (3) Bank–Fund work on standards and sound practices regarding financial sector issues. It also designed and implemented the joint IMF/World Bank Financial Sector Assessment Program (FSAP) in April 1999 as a principal instrument for Bank–Fund collaboration in their financial sector work.

Contributing to the development of the FSAP became the major focus of the FSLC's attention. However, as the international community continued to urge the Fund and the Bank to take on additional tasks such as paying more attention to assessing and encouraging greater observance of a broadening range of international standards and codes, assessing supervisory cooperation and information exchange between supervisors in offshore financial centers and their counterparts in major countries, and helping to reduce the scope for money laundering, FSLC played a coordinating role.