The Guardian on IMF's future
Meanwhile The Guardian has a thougtful leader about IMF's future and legitimacy as an institutional framework in the global economy. The main argument is that with many of the other large global spanning institutions' postwar heritage it might be time to re-evaluate their structure or perhaps even their existence.
"What is the International Monetary Fund for? To its critics on the left, the answer is easy: to foist the harsh discipline of markets on those desperate enough to need its help. If that were true in the past, then it is hardly the case now.
The best place to begin any reforms is with the fund's governing makeup. Like the UN security council or the G7, the IMF's structure is a postwar relic. Voting power is determined by quotas that give Europeans and the US the biggest say. That must change. It is ridiculous that Belgium carries more weight than Brazil, South Korea or India.
If the IMF had greater legitimacy, especially in the developing world, it may yet turn into a robust international umpire and debating forum. But will anyone take notice? This week the IMF made stinging criticisms of US economic policy. The US's response was to tell the fund to mind its own business. At the time the IMF was born, Keynes himself warned: "There is scarcely any enduringly successful experience yet of an international body that has fulfilled the hopes of its progenitors." So far he has been proved right."
Perhaps it is due time to look within for the IMF?
The Economist also talks about IMF's future in their recent issue ... (both articles are available for non-subscribers)
"The International Monetary Fund cannot seem to win. Every financial crisis is the cue for the world's economic Pooh-Bahs to declare that the organisation desperately needs reform. This year there is a conspicuous lack of crises, and yet, as they prepare for the IMF's spring meetings this weekend, the great and the good are at it again. Mervyn King, governor of the Bank of England, says the fund's role is obscure. Tim Adams, the main international man at America's Treasury, has accused it of being “asleep at the wheel”. Critics warn that the IMF"
faces irrelevance unless it reinvents itself radically."
"If the IMF were to wither away—its money untapped, its advice unheeded—should anyone care? If emerging economies want to insure themselves against financial crises, rather than run to the fund, surely they should be applauded? Alas, their self-reliance is expensive and inefficient—as if every home had its own fire-engine. Emerging economies are, in effect, lending to foreigners (by piling up treasury bonds paying miserable rates of interest) in order to underwrite borrowing from them (at higher rates of interest). According to Dani Rodrik, of Harvard University, the developing world's reserves carry an opportunity cost of nearly 1% of GDP."