Monday, October 03, 2005
Washington Consensus - changes?
The Institute for International Economics arranged a conference in September 2005 to consider how to improve the International Monetary Fund.
As an introduction, the IIE prepared a paper, and the MD of the IMF replied to the issues later.
The IIE suggests that instruments should be devised to increase the IMF’s leverage over the exchange rate policies for all nations, and over the economic policies of major industrial countries. And it was said the preferred IMF steering committee is not the old G-7 but the G-20, slimmed down to include one seat for the European Union.
The MD of the IMF focused on economic growth. Rodrigo de Rato said the world needs to move away from a pattern of growth where investment in most of Asia is too low, and high consumption in the U.S. is financed by rapidly increasing debt, and where growth of domestic demand in Europe and Japan is too weak.
But a key problem is how to persuade powerful nations to accept that the UN's IMF should command their economies, as was effectively agreed 60 years ago when nations signed the UN Charter. Do nations still accept that "the world needs a strong and effective IMF as the principal multilateral institution responsible for international economic and financial stability"?
Update
The US certainly support the IMF, now. Per the FT: Frustrated with the lack of meaningful exchange rate adjustment by China and some other Asian economies, the US Treasury has called on the International Monetary Fund to be more ambitious in its surveillance of exchange rates and warned that the "perception that the IMF is asleep at the wheel on its most fundamental responsibility – exchange rate surveillance – is very unhealthy both for the institution and the international monetary system".
As an introduction, the IIE prepared a paper, and the MD of the IMF replied to the issues later.
The IIE suggests that instruments should be devised to increase the IMF’s leverage over the exchange rate policies for all nations, and over the economic policies of major industrial countries. And it was said the preferred IMF steering committee is not the old G-7 but the G-20, slimmed down to include one seat for the European Union.
The MD of the IMF focused on economic growth. Rodrigo de Rato said the world needs to move away from a pattern of growth where investment in most of Asia is too low, and high consumption in the U.S. is financed by rapidly increasing debt, and where growth of domestic demand in Europe and Japan is too weak.
But a key problem is how to persuade powerful nations to accept that the UN's IMF should command their economies, as was effectively agreed 60 years ago when nations signed the UN Charter. Do nations still accept that "the world needs a strong and effective IMF as the principal multilateral institution responsible for international economic and financial stability"?
Update
The US certainly support the IMF, now. Per the FT: Frustrated with the lack of meaningful exchange rate adjustment by China and some other Asian economies, the US Treasury has called on the International Monetary Fund to be more ambitious in its surveillance of exchange rates and warned that the "perception that the IMF is asleep at the wheel on its most fundamental responsibility – exchange rate surveillance – is very unhealthy both for the institution and the international monetary system".
# posted by IJ @ 1:01 PM 
