Impasse at the IMF

Improving global governance
Posted Apr 14, 2015 | Bretton Woods Project, Robert Wade, Jakob Vestergaard

Robert Wade and Jakob Vestergaard of the Bretton Woods Project argue that the IMF’s governance reforms and financing are at risk due to the failure of U.S. leadership and the Fund’s own structural contradictions. Their report asserts that the multilateral governance system is at risk if the quota and board reforms agreed in 2010 during the financial crisis, are not ratified. As the US vote share is more than 15 per cent, it has an effective veto on any decisions requiring an 85 per cent majority. This is damaging the organisation and hampering its ability to play its proper role. Without changes to the supermajority rules, however, China may have acquired an effective veto in twenty years’ time, while the U.S. may have lost enough relative economic weight to forfeit its ability to block decisions. This prospect may be enough to induce the U.S. Congress to agree to adjust the IMF quotas, to prevent another country acquiring an effective veto.


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