Global imbalances : time for action

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Policymakers in the US, Asia and Europe should not wait until financial markets force adjustment in the large imbalances in global current account positions. Although multilateral consultations organised by the IMF began in Summer 2006, they have yet to be followed by policy
actions. The current stalemate is dangerous, as market participants are likely to change their minds at some stage about the sustainability of imbalances. Indications that the main players are able to agree on the
direction of desirable domestic policy changes and are willing to accept the exchange rate implications of global current account adjustment would help make this adjustment
orderly. The time for action is now.