COMMENT Policymakers are increasingly calling for the creation of an early warning system to prevent future breakdowns of the global economy. But so far no one has answered the key questions of who would operate such a system and how it could work. If crises are to be detected and dealt with promptly, those charged with the task must be able to speak clearly and with authority.
Any forthright, disinterested assessment of the global economic system’s stability requires two sorts of independence. First, the institution making the analysis and judgments must not have anything other than its own reputation riding on its assessment; in particular, its own policies or lending should not be shaped in any way by its judgment. That means it should not have any policy or lending facilities. Thus it cannot be part of the existing international financial institutions (IFIs), all of which are policymaking, governmental or lending institutions.
