Wednesday, April 29, 2015

Economic Times: US Should Pass IMF Reforms

We can add Obama Adminstration official Susan Rice to the chorus of those seeking to ramp up pressure on the US Congress to pass the 2010 IMF reforms. In this article in the Indian based publication Economic Times, she ties the passage of the reforms to the idea that it will help integrate emerging nations like India. Below are some quotes from the article.


"The US Congress should pass "quota reform" of the International Monetary Fund (IMF) to better integrate the rising powers like India, the National Security Advisor, Susan Rice has said. 

"Proposed quota and governance reforms for the IMF would better integrate rising powers like China, India, Indonesia, and Brazil, while preserving American leadership and our veto power," Rice said during her addressal to the annual conference of the US Export-Import Bank here yesterday."

"Congress should pass IMF reform so that we can join our G-20 partners to strengthen this bulwark of economic security," Rice said referring to the fact that the Republican-controlled Congress has not passed the much needed IMF quota reform, in the absence of which US has not been able to ratify the changes in the voting structure of the top world financial body
My added comments:

Note the shot taken at the "Republican-controlled Congress" in the article. This is consistent with what we have suggested here on the blog before. We can expect that if we do get another major financial crisis, the US Congress will be blamed for holding up these reforms and impeding the IMF from stepping in to be a "lender of last resort." The last time this happened, Congress quickly caved in and gave authority to setup the TARP program to deal with the last crisis. 

Jim Rickards says the next crisis will be too big for the US to handle alone and the IMF will be called upon to solve things. So, it's not unreasonable to think that if that does happen, the US Congress will get massive pressure to approve the IMF reforms and will probably do that very quickly.  

Added note: Speaking of Jim Rickards, he will be here in Dallas tomorrow (April 30th) and I will be able to attend and provide a summary of his speech here on the blog. The title of the speech is "2015- The Year of Living Dangerously." Among other things it will cover the possible role of SDR's and gold in a future international monetary system.

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