What Stanley Fischer Did at the IMF

Stanley Fischer has officially been nominated to serve as vice chairman of the Federal Reserve. Although he is eminently qualified, one item on his resume is a potential cause for concern: his tenure as second-in-command of the International Monetary Fund from 1994 through much of 2001, a period when the IMF was aiding Russia's post-Soviet transition, as well as responding to crises in Asia and Latin America. Even with significant caveats, the record of the IMF during this period was undistinguished. During his confirmation hearings, senators should ask Fischer what role he played in the key decisions and whether he would have done anything differently with the benefit of hindsight and experience.

Especially relevant to Fischer's potential role at the Fed is the question of whether it is appropriate to preemptively intervene to minimize the potential impact of financial imbalances -- an issue the IMF faced repeatedly during his tenure. An article Fischer wrote for Foreign Affairs in 1998 captures the Fund's official position in the 1990s: "For the IMF fire brigade to arrive with lights flashing and sirens wailing before a crisis occurs risks provoking a crisis that might not otherwise happen." In other words, do everything possible to avoid directly precipitating a crisis.