Sunday, September 20, 2015

Bretton Woods Committee Members Testify Before Congress on Role of IMF

Because nothing has happened recently in regards to the 2010 IMF governance reforms, the topic has kind of fallen off the radar. However, in June some members of the influential Bretton Woods Committee did testify before the US Congress on the issue. Below are a few quotes from this article appearing on the Bretton Woods web site.


On June 17, 2015, Bretton Woods Committee members, John Taylor of Stanford University and Clay Lowery of Rock Creek Global Advisors joined former IMF U.S. Executive Director Meg Lundsager in testifying before the House Financial Services Subcommittee on Monetary Policy and Trade at the hearing, “The Impact of the International Monetary Fund: Financial Stability or Moral Hazard?”  Against the backdrop of the current Greek crises, participants assessed the efficacy of the Fund, weighed the significance of U.S. leadership within the institution, and revived the discussion surrounding the passage of the 2010 IMF quota reform package.
IMF quota reform legislation has languished in the U.S. Congress for the past five years despite U.S. leadership in driving the reform package approval through the IMF’s Board of Governors. Implementation of the 2010 quota reform package would reform the institution’s governance structure (both in voting shares and governing seats) to be more reflective of today’s global economy, in particular giving stronger representation and financial buy-in (quota contribution) to emerging markets. Additionally, it would reallocate money from a special account called the New Arrangements to Borrow (NAB) – bolstered in 2009 by several member countries to give the IMF more resources to deal with the financial crisis meanwhile making NAB resources larger than core quota resources – back to its quota mechanism. The U.S. would not lose its veto power, nor increase its overall financial contribution. Nevertheless, Congress has yet to ratify the reforms despite every other IMF member country having done so. (Click here to see the Committee’s previous work on quota reform).
This hearing provided an opportunity to re-examine the merits of the quota reform package within the broader debate around the impact of the IMF, especially in light of recent developments in the ongoing Greek saga. . . . .

My added comments: For now there is no indication that the US Congress plans to move on this issue any time soon. Both the IMF and the BRICS nations have issued several "final deadline" drop dead dates over the years. Threats of a "Plan B" circulated from the IMF late last year, but nothing has come of those either so far. I think the latest drop dead date is this December with perhaps some news at the end of this month.

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