The Daily Bell
March 19, 2013
Is the US holding back IMF reform? … The legislation would implement reforms agreed by the G20 in 2010, which were described by then IMF Managing Director Dominique Strauss Kahn as ‘the most important decision on the governance of the IMF since its creation in 1944.’ He went on to say that ‘what we did today puts an end to a discussion on legitimacy that had lasted for years, almost decades.’ Yet three years later these ‘historic’ reforms have not been implemented because of US opposition. – The Interpreter
Dominant Social Theme: Please unchain the IMF so it can change the world!
Free-Market Analysis: Mike Callaghan – Director of the Lowy Institute’s G20 Studies Centre – provides us with insight into a big congressional battle going on over the International Monetary Fund. Like most really important struggles, this one is being under-reported, really not reported at all.
But it may be that the outcome of this fight determines whether we have a global currency and how soon we have it. What’s increasingly obvious is that Money Power itself is looking to the IMF for a solution to the current economic crisis affecting the West.
The idea is to take the IMF’s SDRs that are already accepted around the world by various nation-states and turn them into a global currency backed by a number of national currencies such as the dollar, yuan, euro, etc. Perhaps even gold will be become part of the basket.
What is notable about all this is that the IMF has to become stronger and more powerful if it wants to assume this sort of role – and the additional powers given to it are being held up by the US Congress.
The problem is similar to gun control – a much favored Money Power program that has not made much progress in the US despite strenuous efforts of the globalists that back it.
And now it looks like US politics – US exceptionalism, really – may scupper the grand plans of the IMF and its backers, as well. Here’s more from the article:
President Obama‘s attempt to have the legislation passed was rejected by Congress, being described as ‘too politically sensitive in the tense budget environment.’ The Administration is expected to have another go later in the year.
A large majority of IMF members has passed the reforms, but the changes require an 85% majority within the IMF to be implemented and the US has veto power with its 16.75% voting share.
The reform package doubles IMF quotas, shifts six percentage points of quota share to the fast growing emerging markets, moves two of the 24 IMF Executive Board seats from Europe to developing countries and introduces an all-elected Executive Board (currently the five largest members appoint a Director).
While the IMF’s quotas would be doubled, this would not result in an increase in IMF resources. With the increase in quotas (equivalent to capital) there would be a corresponding reduction in the lines of credit the IMF has with its members (debt). The size of the financial commitments by the US to the IMF would not change. Hence this should not be a sticking point for the passage of the bill through Congress.
Despite the article’s tone, it is likely that much of the IMF package is a “sticking point” for a certain part of Congress, especially those labeled as “Tea Party” congressmen who reside in the US House of Representatives.
The article ends on an opinionated note, pointing out that the US may lose “credibility” if it doesn’t sign off on increased IMF powers. Further, the lack of US good will on this issue “is undermining the IMF, the G20 and efforts to enhance better international economic cooperation.”
Conclusion: To which many in the Tea Party would reply, “That’s just the point.”