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Imagine a world in which the annual meetings of the International Monetary Fund were more client-driven. Ahead of the gathering this year's will take place in Indonesia in October the IMF would solicit from its 189 member countries three key policy issues on which to focus, not only in official discussions, but also in the numerous seminars that are held in parallel. For much of the decade since the global financial crisis erupted, countries worldwide have been subject to what London Business School's Helene Rey and others have called "the global factor": A set of external influences that countries cannot manage or control, but that play an important role in determining key domestic variables. Despite attempts to boost resilience, including through both micro- and macroprudential measures, much of the world remains vulnerable to the global factor.As a result, financial conditions for much of the emerging world are likely to become tighter and more unpredictable.First, at the country level, in addition to focusing on general questions of economic resilience, the IMF would examine the scope for effective "sand-in-the-gears" measures to be implemented during the more extreme stages of global liquidity cycles, including to counter disruptive technical forces.
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