Speech

Remarks by Horst Köhler, Managing Director, IMF, Given at a Staff Reception in Honor of Stanley Fischer

October 1, 2001

Dear colleagues and friends, over the past few months there has been tremendous interest in having an event at which the entire IMF staff could say farewell to Stanley Fischer. This is the clearest possible demonstration of how much he has meant to the staff and how clearly he has been seen as an example.

And so, I would like to thank you all for coming to today's reception in honor of Stan Fischer. This is a very special occasion, a chance to celebrate the contributions that Stan has made to the IMF, and to the people of the world. As you know, I had intended for it to take place earlier. But in the past few weeks many things have changed, and many plans have been readjusted. We remain united in our sympathy to the people of the United States, and our condolences to the victims and their families. And we remain united in our desire to help make the world a better place.

Stan came to this institution in 1994, and quickly became the heart and soul of a rather quiet revolution of reforming Fund policies. It is hard to imagine that anyone could have been better qualified for the new position of First Deputy Managing Director. Stan already had a long-standing reputation as one of the world's foremost macroeconomists. He had demonstrated a flair for complex policy negotiations, not least through his work on the stabilization program for Israel in the early 1980's. And he had confirmed his abiding interest in economic development and poverty reduction during his time as Chief Economist of the World Bank.

Over the past seven years, the Fund has faced extraordinary challenges. Stan often mentions what a shock he had, arriving on the eve of the Mexican crisis. In addition, the Fund has struggled, and in most cases succeeded, in helping countries to make the transition from central planning to a market economy. It has tried to become a real partner for low-income countries seeking economic and political stability, growth, and poverty reduction. It has tried to make surveillance more effective in influencing the policies of all of its members, including the systemically-important countries. It has encouraged the process of economic integration in Europe. It has coped with the implications of rapid expansion, innovation, and volatility in international capital markets. And now it will be doing its part to reduce the risks and uncertainties in the world, following the terrible events of September 11.

The IMF could not have handled its responsibilities half so well over the past seven years without Stan Fischer. He was always there for us-as a strong right arm and friend for Michel Camdessus and myself; as a sympathetic, credible, and creative advisor to member governments; as a partner and effective chair for the Executive Board; and as a leader and example for the staff.

Stan, outside the Fund you may be best known as the Fund's crisis manager. But when the dust settles, I am sure that there will be a broader understanding that your real legacy is the relentless search for ways to improve the functioning of the international monetary system and prevent crises. That search is not over, but it has already gone down many different roads with good results.

One reform that is particularly associated with you, personally, is the new spirit of transparency in the Fund. We encourage it in our members, and we practice it ourselves. And I don't think there can be any question that this has been good for the international financial system, for our member countries, and for the Fund. But the complexities it has introduced are illustrated by a conversation that I am told you had with one of our department directors a couple of years ago, in discussing what to say about a particularly controversial case. You reportedly said, "The IMF can't live by the Miranda Rule. We don't have the right to remain silent, and anything we say can-and will-be used against us!"

Stan, I can now reveal that your colleagues and friends have prepared a special volume, commemorating your many contributions to the Fund. These range from a reexamination of the basis for the Fund's advice on core issues like exchange rate regimes and monetary policy, to matters of internal organization and training. To choose just two topics that were highlighted in the commemorative book, I would mention the linkages between macro policy, inflation, and growth, and the issue of the IMF's role as a lender of last resort. You were deeply involved in the development of inflation targeting and-both in that context and more generally-you are widely credited with helping to move the IMF beyond a reflexive position that a more restrictive macroeconomic policy is always the better choice. And you have continued to stress the similarities between the IMF's role in the global financial system and that of a domestic lender of last resort-including the importance of "constructive ambiguity" in coping with moral hazard. I am sure we have not yet heard the last word in this debate, but you have done a lot to clarify the issues!

Overall, for seven years, Stan has been recognized as a strong intellectual leader in the Fund. I think it is worth reflecting on how he accomplished this.

Stan is, first of all, one of the world's foremost economists. But that is only the starting point. He also has a sophisticated understanding of practical matters and political realities, and he is a great teacher and communicator. And in our time working together, I have seen over and over again that Stan is a remarkable strategist, a sort of chess master who is always thinking not just about what comes next, but many steps ahead.

I think it is also clear that Stan could not have accomplished so much, or have won such a place in our hearts, without his extraordinary personal qualities. Here I would mention especially his human warmth and kindness, his moral integrity, his energy, and his sense of loyalty and team spirit.

It's no accident that Stan has made so many friends around the world. They recognize that he treats them with respect and only wants the best possible outcome for everyone. His unfailing honesty and integrity are a benchmark for all of us. He is gentle and kind to the people he meets, but at the same time he can be very candid when this is needed. What I have particularly admired is Stan's approach in dealing with his colleagues in the staff and Management. All of us, including the Managing Director, can take this as an example. Stan is in principle always positive, and I must say this really brings out the best in people. And I would perhaps go a bit further, to say that now is clearly a time when the Fund's strong culture of tolerance and mutual respect is needed, more than ever.

Two other ways that Stan left his mark on this institution were through his initiatives to improve economic research and training in the Fund-which Mike Mussa and Mohsin Khan also had a lot to do with-and his more personal role in encouraging good research and analysis. I know that the staff has appreciated Stan's habit of reading carefully everything that crossed his desk and often getting directly in touch with staff to give them feedback.

Nobody could talk about Stan Fischer without mentioning how hard, and how efficiently, he has worked. It is no accident that he failed to enjoy many months of unused leave, but was fully engaged up to the last minute. He left his house in order. And now he has passed the baton to another person who is uniquely well-qualified, by nature and by training, for the role of First DMD-Anne Krueger, who has really hit the ground running!

Stan is a US citizen, but he is a true citizen of the world and committed to making the world a better place for all of its people. As many of you know, Stan was raised in the small town of Mazabuka, in Zambia, and afterward lived in Zimbabwe which was the original home of his wife, Rhoda. I am tempted to say that his understanding of the social dimensions and concern to fight world poverty goes back to his African roots. But I am sure it is even deeper than that.

Stan, I am also sure that you have been deeply troubled by the difficulty of making more rapid progress on this front. And you are certainly concerned when the social cost of necessary adjustments is high. No allegation about the IMF-and, especially, about Stan Fisher-could be more stupid and unjustified as the accusation, after the Asian crisis, that the IMF was indifferent to social problems. We need to be energetic in dispelling this perception, through our words, and through our actions. I want to assure you, Stan, that as far as I am in charge, the IMF will play an energetic role, based on its mandate and expertise, in the fight against poverty-and it will stay engaged in Africa.

Of course, there can be tension between our good intentions and the best judgment of what is achievable and economically desirable. But you have often been able to square that circle, by demonstrating how sound economic principles can also provide the basis for good social policy. I am really hoping that you will find the time now to write a book that can give the rest of us the benefit of your insights on how best to balance economic and political realities.

If humanity is your beacon in life, then one of the reasons must be your wife, Rhoda. Stan, your once told me that Rhoda is your most important advisor. And I am sure that she must also know better than anyone how much time, energy, and emotional commitment you have devoted to this institution over the past seven years. Thank you, Rhoda, for your understanding and for your support.

With these remarks, I am sure I have only begun to describe how much Stan Fischer has meant to the IMF, and to the world. So I will listen, along with you, to our other speakers. But first, Stan, from the bottom of my heart, thank you. We owe you a lot, and we will not forget it.

As one indication of the high regard and affection of your colleagues, Stan, I would now like to give you this commemorative volume. This reflects contributions from the staff and Management, as well as from members of the Executive Board, reflecting on what you have meant to the Fund, and to them personally. I hope you will read this and enjoy it, and accept please all of the wonderful things it says about you!

Again, Stan, many thanks from all of us.