"America can and must continue to act and to lead to take the urgent steps needed today to calm the financial crisis, restart the engine of growth in Asia and minimize the impact of financial turmoil on other nations and to make certain that for tomorrow the institutions and rules of international finance and international trade are prepared to support steady and sustainable growth over the long term."

President Clinton,
Council on Foreign Relations, New York
September 14, 1998

The global imperative for the Clinton Administration has been to build a global financial system in which capital account crises of the scale of the Asian financial crisis will not reoccur. There are three core components to building such a system: Enhancing the capacity of emerging market economies to absorb capital safely; reducing countries' vulnerability to sudden turnarounds in confidence, whatever their origin; and developing the most effective international tools for responding to these new kinds of crisis.

A RECORD OF ACCOMPLISHMENT

G-7/8 Leadership

• Promoted reform in the International Monetary Fund (IMF), with Congress and the support of the rest of the G-7, in order to bring transparency, accountability and more strict conditions for IMF loans to struggling economies.
• Substantially modernized IMF's lending policies to reflect growing role of private capital markets, by focusing IMF lending more on short-term balance of payments needs.
• Led the G-7 to adopt initiatives to strengthen the international financial architecture by creating stronger institutions, to strengthen the IMF and the World Bank, to include emerging countries in global dialogues on financial markets, to enhance transparency in governments and financial institutions, to create stronger regulation in lending countries, to equip emerging markets to deal better with risk and to share responsibility for crisis resolution.
• Agreed, along with the G-7, to develop a precautionary line of credit and an emergency facility at the World Bank in order to strengthen arrangements for dealing with future economic crisis contagion.
• At the G-7 summit in Cologne in June 1999, endorsed the Heavily Indebted Poor Countries (HIPC) Initiative, which is designed to provide deeper multilateral debt reduction for poor countries with unsustainable debt burdens. This initiative would provide a 70 percent debt reduction for the designated countries.
• Submitted an amended budget to Congress in September 1999 requesting appropriations of $1 billion for the next four years in order to fund our contributions to the HIPC Initiative.

Financial Crisis

• Led the initiative to bring about change in the IMF through creating mechanisms to improve borrower incentives, increase IMF transparency and accountability through wider publication of IMF documents and prevent the burden of adjustment from falling heavily on the poor.
• Pushed for and won approval by Congress of the IMF quota, which provided $90 billion in new resources for the organization to combat the financial crisis.
• Led an international effort to combat corruption, culminating in an effort to conclude and ratify the Organization for Economic Cooperation and Development (OECD) Anti-Bribery Convention, to complete a WTO agreement on transparency in government procurement, and in the release of a comprehensive National Money Laundering Strategy.
• Pushed for reform of the IMF and the creation of the Contingent Credit Line, to encourage safer debt management practices and reduce the risk of contagion to countries with strong policies and institutions.
• Encouraged expansion of the Special Data Dissemination Standard (SDDS), a standard by which countries accessing capital markets are to improve their information collection and publication practices. Pushed for greater participation and compliance with SDDS standards among emerging market economies.
• Agreed to participate in the New Arrangements to Borrow.

Mexican Peso Crisis

• Took bold, decisive action by providing financial stabilization assistance to Mexico in the wake of the peso crisis of late 1994. This courageous initiative stabilized the Mexican economy and helped preserve the 700,000 U.S. jobs dependent on U.S. exports to Mexico.
• Restored financial stability to Mexico and contained the threat to other emerging markets in the world through a $12.5 billion loan that halted Mexico's crippling liquidity crisis
• Allowed Mexico to prepay $7 billion owed to the United States under its emergency support package. In January 1997, Mexico announced the full repayment of all funds borrowed from the United States. By 1996 the U.S. Treasury had already earned more than $1.2 billion in interest on this loan program, which was $460 million above our borrowing costs. Mexico also repaid $1.5 billion on its International Monetary Fund obligations.

Asian Financial Crisis

• Supported IMF-financed stabilization programs for the countries of Asia affected by the crisis. These programs, which complement and reinforce our trade policy goals, included measures to strengthen financial sectors, rationalize business-government linkages, improve transparency, open markets to foreign investment and reduce trade barriers.
• Continued efforts to open markets in the region, to secure new trade agreements and enforce old agreements in order to encourage economic growth and stability.
• Urged International Economic Institutions such as the IMF, the World Bank and the Asian Development Bank to explore plans to relieve individual firms of massive debt and to establish a social safety net for Asian families hurt by the crisis.
• Pledged to increase the commitments of our Export-Import Bank to specific economic development projects at the end of 1998 in order to benefit citizens of countries affected by the crisis and to increase our exports to those countries.
• Supplemented the IMF's efforts to monitor compliance to IMF trade-related commitments in applicable markets.

Brazilian Financial Crisis

• Contributed $5 billion in late 1998 to an international financial package designed to stabilize and revitalize the Brazilian economy after their brief financial crisis. Brazil to date has already started to repay $3.2 billion of the funds given by the United States.

TIMELINE OF ACCOMPLISHMENT

REFERENCES

• Fact Sheet: "Emergency Support Program for Mexico Concludes Successfully and Ahead of Schedule," January 15, 1997.
  
• "Emerging from Crisis: the Beginnings of a New Asia," Deputy Treasury Secretary Summers, February 11, 1998.
  
• Testimony of Ambassador Charlene Barshefsky, USTR before the House Ways & Means Trade Subcommittee, February 24, 1998.
  
• Remarks by the President to the Council on Foreign Relations, September 14, 1998
  
• Remarks by the President to Opening Ceremony of the 1998 International Monetary Fund/World Bank Annual Meeting, October 6, 1998.
  
• Press Briefing by Secretary Rubin, National Economic Advisor Sperling and Deputy Treasury Secretary Summers, October 30, 1998.
  
• Treasury Secretary Rubin Remarks on "Reform of the International Financial Architecture" to the School of Advance International Studies, April 21, 1999.
  
• Treasury Secretary Rubin Statement to the IMF Interim Committee, April 27, 1999.
  
• Fact Sheet on the Cologne Debt Initiative, June 18, 1999.
  
• Fact Sheet: "Strengthening the International Financial Architecture," June 18, 1999.
  
• Priorities for a 21st Century Global Financial System, Treasury Secretary Summers, Remarks at Yale University, September 22, 1999.
  
• Fact Sheet: Statement by Treasury Secretary Lawrence Summers, September 15, 2000.
  
• Fact Sheet: "Strengthening the International Financial Architecture", Treasury Department, July 8, 2000.

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