A new briefing argues for a reformed International Monetary Fund within “a new financial architecture”. The report, by the German NGO World Economy, Ecology and Development (WEED) rejects calls for the wholesale dismantling of the Fund.
A reformed Fund must “give up its role as an instrument of societal and political disciplinary neoliberalism,” says the report’s author Rainer Faulk. He believes the IMF must create space for alternative development discourses and give up its role as a mechanism that favours the main creditor nations. Accompanying this rollback must be a strengthening of the Fund’s function as global financial regulator to “fill the increasing need for an international regulatory body’.
Regulatory support includes the financial monitoring of the lead industrial nations, including suggestions of exchange rate target zones for the three major currencies – dollar, yen and euro – for the purposes of global currency stabilization.
The report notes that the IMF‘s Articles of Agreement explicitly include the option of instituting national capital controls as a means of regulating international movements of capital (Article VI, paragraph 3). But up until the Asian financial crisis, the Fund was attempting to amend its constitution to provide it with a mandate to liberalise capital markets within the framework of its country surveillance programmes.
Distinguishing between the Fund’s financing and economic development functions, Faulk argues that financing to deal with economic crises remains necessary and should be strengthened. However, another institution should administer disbursements, the report says, without suggesting which one. The report also calls for a review of current credit conditionalities to make them clear and restricted.
At the heart of the reform agenda proposed by WEED lie the calls for institutional reform of the Fund itself, including the democratisation of the Fund’s decision-making structures. The report joins an existing chorus of voices calling for restructuring of voting patterns within the Fund which grants the US 17.8 per cent of voting rights and other industrialised nations substantially more power than the debtor nations. However, the report rejects proposals for a one-country-one-vote system, preferring a decision-making structure based on a country’s population, economic potential and its ranking in UNDP‘s Human Development Index.
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