Lagarde firmly believed that the legitimacy and effectiveness of the Fund cannot be taken for granted; they must be continuously proved, and improved, whenever possible or necessary.

Under Dominique Strauss-Kahn's leadership, the Fund has definitely changed for the better, successfully repositioning itself at the centre of the global economic and financial system. It learnt a great deal from the recent financial crisis, including openness to new ideas, while remaining loyal to its core values and principles. The Fund needs however to continue its shift towards responsive, even-handed and balanced action in support of global economic and financial stability, the better to serve the whole membership.

The Fund has a lot on its plate with an uneven world recovery, the reopening of global imbalances, potentially destabilising capital flows, high level of unemployment, rising inflation, and difficult country cases.

She presented the following key principles that should, in her view, lead the Fund over the next five years:

• Relevance: The Fund must keep its recently-regained pivotal role with respect to global economic and financial cooperation. The international community needs the Fund and the Fund must have the necessary mandate from its membership to discharge its duties. Because of that I would be open to work with all of you on changes to the legal framework of surveillance such as the 2007 surveillance decision or even explore changes to the Articles of Agreement, however difficult they may seem.

• Responsiveness: the Fund must constantly enhance its capacity to respond to members' needs based on circumstances, with special dedication to the most vulnerable part of its membership.

• Sufficient resources and adequate tools: This will require first delivering on commitments made by member countries, which will need sustained attention. It will also require better leveraging Fund resources, notably through enhanced cooperation between the Fund and regional financial arrangements.

• Increased legitimacy: Legitimacy is a precondition to the acceptance of any reform. One obvious prerequisite is to implement promptly the historic governance reform that was agreed last year. France has shown leadership in this respect.

• Diversity and team work: The dedication and expertise of staff have to be nurtured and protected, whilst ensuring equal opportunities and diversity in all its facets, gender-wise, academic and geographic. In-breeding leads to group-thinking and “silo mentality” leads to underperformance, as the report from the IEO (Independent Evaluation Office) pointed out. Diversity will strengthen legitimacy, but will also reinforce effectiveness.

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