by Edwin M. Truman
Peterson Institute for International Economics
Testimony before the US House Committee on Financial Services Subcommittee on International Monetary Policy and Subcommittee on Domestic Monetary Policy and Technology
May 20, 2010
Chairmen Meeks and Watt, ranking members Miller and Paul, and other honorable members of your subcommittees: I appreciate the opportunity to appear before you to discuss the role of the International Monetary Fund (IMF) and the Federal Reserve in stabilizing Europe. I will focus primarily on the first aspect of this topic.
The Greek tragedy, which is now on center stage, was largely of the Greek authorities' own crafting. However, it also emerged as an aftershock of the global economic and financial crisis of 2007–09 and has set off a European crisis. The challenge is to manage the European crisis so as to minimize the negative fallout on the fragile global economy and financial system and to reduce the severity of other aftershocks, which inevitably will occur over the next several years. How successfully the Europeans, the United States, and other systemically important economies deal with that challenge will determine the strength of our own and the global economic recovery now underway.