G20 Official - IMF Reforms are "at a dead end"

This CNBC article just confirms what we have already noted here. While there is lots of talk about bypassing the US at the IMF and a possible "Plan B", the reality is more likely that nothing is going to happen soon unless some kind of new crisis emerges.

Here are some quotes from the article. 

"Reforms to the International Monetary Fund have hit a deadlock despite a declaration from global financial chiefs that they would move forward without the United States if it fails to ratify the changes by year-end, a G20 official said on Sunday."

"Some said that we need to give the U.S. more space," the official, who participated in the G20 talks and spoke on conditions of anonymity, said. "I say we are at a dead end."

Christine Lagarde, managing director of the IMF, said it is too early to talk about alternatives.

"Plan A is going to be explored to the end, and in depth, but if that plan A doesn't work, then we will worry about plan B."

For now, the G20 official said, there is no plan B.

"There is nowhere to go," he said. "Initially, you have a discussion, but then when you move to details, there is nothing."

"At the G20 meeting over the weekend, officials tried to stay optimistic that the U.S., despite complaints from some Republicans have that the changes would cost too much at a time Washington was running big budget deficits, will come forward.

But the prospects are not promising, the G20 official said."

my added comments: 

this is a more realistic assessment of things in our view because there is no reason to think the Republican House will change on this prior to the elections this fall (unless a new crisis emerges). And if they win this fall as expected, it is hard to see why they would change after the elections either. It seems like this reform package is probably dead unless something major happens that puts pressure on Congress to change. The only thing I can think of right now would be a global financial crisis where it was essential for the IMF to step in. Otherwise, why would they change their minds? 

It seems like the more likely scenario is Russia and China continuing to work on trade deals they bypass the US dollar, continue to build their new developement bank, and for both countries to seek wider adoption of their own currencies. And a gold backing for either the Yuan or the Ruble or both would not be shocking at some point either.