The IMF has committed itself to ending European dominance of selection of its managing director, and introducing an open, merit-based and transparent process. This paper sets out the three key elements to ensuring a successful process next time: a focus on selecting the best candidate available; a clear, fair, and transparent process; and the legitimacy gained from the backing of a majority of countries as well as IMF voting shares.
In late February, the IMF appointed Nemat 'Minouche' Shafik as the third deputy managing director, replacing Brazilian Murilo Portugal, who resigned in mid January to become the president of Brazilian Banking Federation.
Civil society groups have challenged Bank plans to rush through a new lending instrument, Program-for-Results, that would mean safeguards or equivalent standards no longer apply to a major portion of Bank lending. Meanwhile, a secretive review could strip the Bank's accountability bodies of their independence and safeguards could be scaled back for projects deemed "low risk".
The Independent Evaluation Office (IEO) found major IMF lapses in judgement before the financial crisis, including the promotion of "light-touch regulation", casting doubt on the Fund's ability to contribute to taming global finance.
After a spike in lending that shored up the IMF's income and financial position, the Fund board is considering various options for refurbishing its headquarters building in Washington.
In January, French president Nicholas Sarkozy stoked the debate about reforming the international monetary system while deliberations on the potential future role of the IMF’s special drawing right as a prototype global reserve currency continued.
Praise for improvements to World Bank transparency have been tempered by ongoing criticism of weaknesses in implementation.
While the World Bank has lately changed its rhetoric on how to approach its knowledge role, critics fear that without internal governance reforms the new approach remains nothing but an empty slogan.
IMF managing director Dominique Strauss-Kahn called agreements reached on IMF governance reform "historic". A closer analysis reveals that the shifts in votes are smaller than claimed and though the basic power structure of the IMF will better incorporate large emerging markets after two years, it will continue to be dominated by the US and Europe.
Renosi Mokate, former deputy governor of the South African Reserve Bank, has been elected to the World Bank's board of executive directors.