In a speech to the US Council on Foreign Relations on 'The case for US economic leadership', Lew said that US leadership of the global economic system has produced economic successes over the past 70 years or more. Sustaining that economic leadership and adapting it to the challenges of our time is critical to future US and global stability and prosperity, he said.
It is time to "further modernise the IMF", Lew said. The fund needs to "intensify scrutiny of critical issues like exchange rates, current account imbalances, and shortfalls in global aggregate demand", he said.
The system does not automatically police itself, he said: "it requires responsible American leadership"
The existing system was a major reason that the global financial crisis did not turn into a second great depression, Lew said: "The United States and other nations were able to coordinate efforts through the G20 and the IMF to avoid the downward spiral of protectionism and predatory macroeconomic policies that characterised previous eras.”
Lew said US would work with allies to further modernise the IMF to improve its oversight of the way nations manage their exchange rate policies and trade balances.
Lew also called for "greater transparency" about IMF members’ economic data, especially as it relates to foreign reserves.
Lew said that the World Bank must be made "more efficient and effective" and be given the resources it needs to help governments cope with crises ranging from climate change to pandemics and forced migration.
The US also needs to embrace new players on the global economic stage, such as the Asian Infrastructure Investment Bank, and make sure they meet the standards of the trading system that US created, Lew said.
However, the US must have a say in the development of new standards. "The worst possible outcome would be to step away from our leadership role and let others fill in behind us," he said.