Momentum gathers for IMF shake-up

Finance leaders of the IMF's 184 member states endorsed proposals to give the organisation a bigger role in policing countries' exchange-rate policies.

They also backed calls to give emerging economies such as China and India a bigger say in how the IMF is run.

The comments came during meetings in Washington of the IMF and World Bank.

The IMF is facing increasing calls to reform itself and become more relevant in a rapidly changing world economy.

Crisis resolution

"The world economy is not a frozen thing, it changes over time"
Rodrigo Rato, IMF Managing Director

Speaking after talks on Saturday, UK Chancellor of the Exchequer Gordon Brown - who currently chairs the IMF's policy-setting committee - said the 61-year-old institution needed to better adapt to the current global environment.

"We resolve to make the IMF more fit for purpose in a global economy and more able to address challenges that are quite different from those of 1945, when the IMF was created," Mr Brown said.

"Specifically, we agree the IMF must focus more on crisis prevention as well as crisis resolution."

Plans to give the IMF a broader role in monitoring the exchange rates of countries - and now the economic policies of one country can affect those of others - are particularly popular in the United States.

The US trade deficit with China has already reached $202bn (£113bn), and US politicians and manufacturers have accused Beijing of keeping its currency artificially low in order to boost exports.

"The IMF should be more able to address global questions with multilateral surveillance," Mr Brown said.

However, the boss of China's central bank, Zhou Xiaochuan, warned the IMF to be "extremely cautious" in publishing the results of any exchange rate reviews in order avoid unnerving global financial markets.

'Rightful position'

IMF Managing Director Rodrigo Rato said the organisation's policy-setting committee had given him the go-ahead to propose changes to the voting shares of member states.

"I have spoken several times about the need for increases in voting power for some countries, including a number of emerging market economies, to ensure they have a role in the fund's decision-making process that accords with their increased importance in the world economy," Mr Rato said.

"This is an institution based on the representation of countries based on their economic weight in the world economy. The world economy is not a frozen thing, it changes over time."

Originally set up in 1945, the IMF, and its sister institution the World Bank, were founded largely with the industrial needs of the US, Europe and Japan in mind.

However, the emerging economies of countries such as China, India and Brazil have since become increasingly important on the world stage.

The boss of India's central bank, Yaga Reddy, said it was time that "emerging market countries should get their rightful position" at the IMF.

RELATED INTERNET LINKS
IMF
The BBC is not responsible for the content of external internet sites