Tuesday, December 22, 2015

Quietly, US Congress Passes the IMF 2010 Reforms

We have followed this story for two years now. The 2010 IMF reforms giving more voting power to China at the IMF had been stalled in the US Congress. But very quietly, they were finally passed in the recent US spending bill. The provision was buried deeply with no mention of it prior to the vote being taken. Below are some quotes from this USA Today article on it.

Deeply buried in the $1.1 trillion spending deal unveiled by congressional leaders Wednesday is an arcane provision for new funds and reforms at the International Monetary Fund. Though the item is getting scant notice, it is a big deal for preserving the United States' seven decades of leadership in global finance.

The measure contributes $300 million to the IMF and doubles to $670 billion the funds the IMF can lend to countries in distress, such as Greece and Ukraine, to avert global financial meltdowns.

President Obama rightly pushed hard for the deal, calling it vital to U.S. leadership and security.

The legislation gives China, India, Brazil and other developing nations a bigger share of voting power in the IMF to reflect the size of their economies while preserving the sole veto power held by the United States, which controls 16% of the votes. China’s share rises from 4% to 6%.
My added comments: Please note that these reforms not only give China more voting power, they also "double to $670 billion the funds the IMF can lend to countries in distress." If you believe in Jim Rickards prediction that the IMF will eventually play a major role in the next global financial crisis using the SDR, this is a meaningful step in that direction.

Click here to read the full USA Today article

Here is Willem Middelkoops take on the news on his twitter feed:  https://twitter.com/wmiddelkoop/status/678795070661881856

China would love to see SDR to become the new dollar. So they can exchange US $-Treasuries into SDR-bonds (.. issued by IMF, a next step?)

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