Strauss-Kahn Says Officials at G-20 Agreed on `Biggest Reform Ever' of IMF
Group of 20 nations agreed on an overhaul of the International Monetary Fund that gives a larger voice to emerging market nations, IMF Managing Director Dominique Strauss-Kahn said.
More than 6 percent of voting rights will be reallocated to underrepresented emerging-market nations and Europe will give up two board seats in the “biggest reform ever in the governance of the institution,” Strauss-Kahn told reporters today in Gyeongju, South Korea. The G-20 also agreed on the structure for a “financial safety net” to stop nascent financial crises before they speed out of control, he said.
The IMF’s board may approve the package in the first week in November, and it will probably take a year for the changes to be put in place, Strauss-Kahn said. The package includes a shift in the composition of the IMF’s executive board and the fund’s 10 biggest shareholders.
Strauss-Kahn called the deal a “historical agreement” as the Washington-based lender takes on a larger role in monitoring the world’s economies, currencies and capital flows. South Korea, the host of this weekend’s meeting of G-20 financial chiefs, proposed the safety net.
G-20 officials also prepared an agreement to avoid competitive devaluations and give the IMF greater sway in assessing economic imbalances among nations.
The IMF will move to an all-elected executive board of directors and Europe will give up two seats. Earlier today, a G- 20 official said that the Group of Seven, Brazil, Russia, India and China settled on the plan after a disagreement between the U.S. and Europe over how to increase the role of emerging-market countries on the fund’s board.
Group of 20 leaders pledged last year to increase the voting power of China and others and planned to settle on details before G-20 leaders meet in Seoul in November. U.S. Treasury Secretary Timothy F. Geithner has cited this plan in his campaign for China to allow its currency, the yuan, to appreciate against the dollar.
Strauss-Kahn said the changes will give the IMF a “totally legitimate board.” European nations will be able to take advantage of the implementation period to work out exactly how the shift in board seats will take place, he said.
After the changes take effect, the fund’s 10 biggest shareholders will comprise the U.S., Japan, four major European economies and Brazil, Russia, India and China.
To contact the editor responsible for this story: John Fraher at firstname.lastname@example.org