US official pushes for IMF reform, praises the AIIB
A senior US Treasury official expects the International Monetary Fund (IMF) to eventually have a chief from outside Europe.
Nathan Sheets, the US undersecretary of treasury for international affairs, was talking about IMF reform on Tuesday when he was asked if the IMF managing director could come from an emerging economy such as China and Brazil.
“I do expect that in the not too distant future, there will be discussions of managing directors from other parts of the world. And I think that is altogether appropriate and the way it should be,” he said at a talk at the Center for Strategic and International Studies in Washington.
He said the goal would be to find the most qualified and effective people to continue to move forward in the senior leadership of the IMF.
As a tacit agreement between the US and European nations, the IMF has always been headed by a European while the World Bank is presided over by an American. That has raised eyebrows over the years when emerging economies seek to have more of a say in international financial institutions.
“My sense is very much that the managing director at the IMF must be chosen based on competence, on experience and on the broad set of qualities and attributes that person brings to the table,” Sheets said, praising the current managing director Christine Lagarde, a Frenchwoman, as being “exceptionally effective in that position”.
After a five-year delay and a harsh warning from Lagarde, the US Congress approved the IMF 2010 quota and governance reforms last December. The reforms doubled the IMF’s permanent resources and gave greater voice to emerging markets and other underrepresented countries. The reforms preserved US voting share.
“The 2010 reforms made important progress, but we are not finished reforming the fund,” Sheets said, adding that the US is working to further modernize the IMF’s system of governance and improve its capacity to deal with evolving challenges.
He said that as emerging economies grow, they desire and deserve a greater stake in the institutions at the center of the global economy.
“We believe that further enhancing the voice of emerging markets at the IMF is necessary to preserve the legitimacy and effectiveness of the institution,” Sheets said.
“Emerging markets comprise an increasing share of the global economy, and we should incentivize them to embrace greater responsibility to contribute to global economic prosperity through cooperative policies,” he said.
Sheets dismissed the notion that the US saw institutions such as the China-led Asian Infrastructure Investment Bank (AIIB) as a threat to US influence in the international financial system.
“But we have been clear that the US stands ready to welcome new institutions into the international architecture, provided that they share the international community’s strong commitment to sound governance principles and high social and environmental standards,” he said.
Nathan Sheets, US undersecretary of treasury for international affairs