World Remains Divided Over Next IMF Chief
Ever since the resignation of Dominique Strauss-Kahn as IMF chief, there has been great debate as to who should be his successor. The lack of world consensus over who should be the next IMF chief is largely due to the dissatisfaction of emerging economies in regards to nearly half a century of IMF leadership dominated by European nations. Emerging economies such as BRIC (Brazil, Russia, India, China), Mexico, South Africa, and other developing nations have sought to have more representation when it comes to the IMF’s power and decision-making. The fund has been led by Europeans ever since its inception, 46 years ago. Along with the creation of the IMF came along a deal between Europe and the United States where the United States would hold the power to choose the leadership of the World Bank. This is central to the grievances of emerging economies and their advocation for the next IMF chief to be one not hailing from a rich and developed nation such as the United States or a European nation.
As it stands, the top contender for the new IMF leading role is Christine Lagarde, the French Finance Minister. Lagarde continues to tour the world by visiting large cities in a campaign for the position. According to Reuters, while Lagarde was visiting Beijing to speak with Chinese officials this week, she issued her support for a larger Chinese voice at the fund if elected, but that addressing the problems emanating from the euro zone crisis (countries like Portugal and Greece who continue to have trouble cutting their looming budget deficits) would continue to be her top priority. Lagarde also stated that she would support the increase of China’s voting rights at the IMF from 3.65% to 6.4% as well as being instrumental in helping the Chinese Yuan become a world currency. Despite Lagarde’s extended olive branches to officials in Beijing, China has not officially come out in support of her candidacy.
– Shaun Hoyes
Article submitted by: Shaun Hoyes of the Capital Markets Lab (CML). To learn more about the Capital Markets Lab please visit https://business.fiu.edu/capital-markets-lab/.