	Introduction

The economies of the world appear to be heading into a simultaneous slowdown and possibleglobal recession that could bear significant consequences for U.S. and world employment,government finances, stock markets, international trade, and capital flows. The poor economicoutlook has been clouded even further following the terrorist attacks on September 11, 2001 in theUnited States, even though industrialized nations around the world have taken action to easemonetary policies in an attempt to forestall further declines in economic growth rates. There hasbeen a sharp curtailment of activity in industries such as travel and tourism, a drop and slow recoveryin stock markets, and sagging consumer confidence not only in the United States but in numerousother countries. Unlike the Asian financial crisis of 1997-99 when economic strength in the United States and Europe offset weakness in Asia, Russia, and Brazil, this time all major economies seem to beslowing at the same time. The U.S. response to this global downturn has entailed and may requireadditional action by the U.S. Federal Reserve, the Bush Administration, and the Congress in concertwith the International Monetary Fund (IMF) and other multinational organizations. Congressional interest in this issue is related to: (1) the effects of global economic turmoil on the U.S. economy, (2) operations of the International Monetary Fund, (3) U.S. responses toglobalization, and (4) U.S. policies to stimulate the economy. Among these policy issues, this reportwill focus on the spread and effects of the economic turmoil with a focus on Asia. The International Monetary Fund

The International Monetary Fund began operations in 1947 and now has 183 countries who aremembers. (17)

	U.S. Economic Policy

Since the United States is the largest economy in the world, global economic conditions dependgreatly on the state of the U.S. economy. As the developing recession in the United States has pulleddown other economies, a strong recovery could do much to lift the economies in the rest of theworld. This can be pursued primarily through monetary and fiscal policies - both domestic andcoordinated with those of other nations - and international trade policy being pursued to increaseglobal market efficiency and to ameliorate the adverse effects of foreign unfair trade practices.
The economies of the world appear to be heading into a simultaneous slowdown and possible global recession that could bear significant consequences for U.S. and world employment,government finances, stock markets, international trade, and capital flows. The poor economicoutlook has been clouded even further following the terrorist attacks on September 11, 2001. Therehas been a sharp curtailment of activity in industries such as travel and tourism, a drop and slowrecovery in stock markets, and sagging consumer confidence not only in the United States but innumerous other countries.
Unlike the Asian financial crisis of 1997-99 when economic strength in the United States and Europe offset weakness in Asia, Russia, and Brazil, this time all major economies seem to beslowing at the same time. The U.S. response to this global downturn has entailed and may requireadditional action by the U.S. Federal Reserve, the Bush Administration, and the Congress in concertwith the International Monetary Fund (IMF) and other multinational organizations.
Congressional interest in this issue is related to: (1) the effects of global economic turmoil on the U.S. economy, (2) operations of the International Monetary Fund, (3) U.S. responses toglobalization, and (4) U.S. policies to stimulate the economy. Among these policy issues, this reportwill focus on the spread and effects of the economic turmoil with a focus on Asia.
In seeking a new world financial architecture, policymakers are trying to improve the international monetary and financial system, to reduce the risk that systemic crisis will recur, and toensure that, when isolated country crises do happen, there are early warnings, effective policy tools,adequate resources, and broad support to help nations withstand difficult external conditions.
Several studies have examined the role of the International Monetary Fund in financial crises. The IMF, itself, also has been reviewing its policies and operations in light of severe criticism fromvarious quarters. It has begun to take more preventative measures, has increased transparency, andis working with nations to improve their standards, economic policies, and measures to preventfinancial crises from occurring.
Since the United States is the largest economy in the world, global economic conditions depend greatly on the state of the U.S. economy. As the nascent recession in the United States has pulleddown other economies, a strong recovery could do much to lift the economies in the rest of theworld. This can be pursued primarily through monetary and fiscal policies - both domestic andcoordinated with those of other nations - and international trade policy being pursued to increaseglobal market efficiency and to ameliorate the adverse effects of foreign unfair trade practices.