The G-20 mutual assessment process--a perspective from IMF staff

In the wake of the financial crisis, G-20 leaders launched a framework to mutually assess their policies to help strengthen the global economy. This article reflects on the experience so far with the Mutual Assessment Process (MAP). It looks at the coordination problem facing G-20 economies with respect to the need for global rebalancing of demand. While a classic ‘coordination failure’ has some appeal, a more compelling case for policy cooperation is based on the role of spillovers and interdependence. In this context, the G-20 MAP—as a coordination vehicle—has the potential to build shared understanding, enhance mutual trust, and galvanize action among members. Simulated gains from collective action are potentially sizeable. However, key conditions that engendered remarkable global cooperation at the height of the crisis are now more diffuse, posing challenges to what the MAP might achieve going forward and providing some initial lessons for international policy coordination.