1 A DEVELOPMENT FRIENDLY REFORM OF THE INTERNATIONAL FINANCIAL ARCHITECTURE José Antonio Ocampo * The financial crisis has shown how dysfunctional the current international financial architecture is to manage today’s global economy. The need to govern globalization has never been clearer, but at the same time the institutional arrangements that we have had never been so impotent. The calls for deep reforms of such architecture and even for a second Bretton Woods Conference are, therefore most welcome. Similar calls for reform were made after the Asian and Russian crises, which engulfed most of the developing world in deep recessions, but they led to at best marginal reforms. The fact that this time the industrial countries are at the center of the storm may lead them into action, but also creates the risk that measures of direct interest to developing countries may be marginalized in the current debate. There are also two fundamental problems with these calls. The first is that they lack scope and, in some cases, even contents. Most of the proposals –for instance, those of the November G20 meeting— relate to macroeconomic action to counter the world recession and to regulatory reform, and in both cases they are largely confined to national policies rather than to the reform of the global architecture. Second, the process started the wrong way, by excluding most countries from the table. It is obviously good for * Professor and co-President of the Initiative for Policy Dialogue at Columbia University. Former Under- Secretary General of the United Nations for Economic and Social Affairs and former Minister of Finance of Colombia. Paper prepared for the workshop organized by the North-South Institute on “Policy Responses to Unfettered Finance”, at Columbia University, New York, February 12-13, 2009. This paper draws from the document written by the author for the South Centre and issued as a statement of its Board on October 29, 2008. Financial support from the Ford Foundation is kindly acknowledged.