Last weekend the IMF’s International Monetary and Financial Committee (IMFC) and the World Bank IMF Development Committee held their annual spring progress meeting. In an opening statement, Gordon Brown, the UK’s Chancellor of the Exchequer and the Chairman of the IMFC, proposed, on behalf of the UK, that the IMF place far greater emphasis on surveillance and crisis resolution in their continued task of ensuring international economic stability. This would require far greater prominence on surveillance, specifically, assessing each country’s compliance with its obligations of ensuring orderly exchange arrangements, promoting a stable system of exchange rates and avoiding the manipulation of rates or the monetary system in order to influence balance of payments or to gain an advantage over other countries.
Brown proposed three changes: a new annual remit for surveillance: that the IMF be organised so as to separate surveillance from its role in country lending: and that responsibilities be established to quantify the key risks in the global economies and to identify risk mitigation policies. Brown also proposed a radical change to the governance of the IMF whereby poorer countries have a greater say in the decision making processes.
These proposals are supported by the Institute of International Finance (IIF), the international association of corporate and investment banks, trading companies, credit and rating agencies, who, in an open letter to the IMFC sent the week before their meeting, proposed an eight-point set of reforms. These identified surveillance as the key task of the IMF, made greater usage of the expertise of the global finance community, emphasised greater transparency and adapted the IMF’s governance structure to take into account the realities of the largest emerging economies. It seems that the proposals of this letter have been well received.
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