Recently, the governor of the Bank of England, Mervyn King, warned that the International Monetary Fund (IMF) risked falling into obscurity unless it was given a radical shake-up to provide greater focus, independence and legitimacy.
King called on the IMF’s shareholders — national governments around the world — to take on the responsibility of bringing the global monetary and financial watchdog up to date.
”The IMF’s remit is unclear,” he said. ”Its lending activities have waned, and its role in the international monetary system is obscure.”
Privately, King has long felt that the IMF is no longer fulfilling its founding purpose, and has grown impatient with the failure to take action. He said the IMF should concentrate on three tasks: providing and sharing information about the health of all major countries; encouraging countries to abide by their commitments through greater transparency; and providing a forum to discuss risks to the global economy.
At present, King said, the fund lacked a role. ”Its surveillance lacks focus. Its lack of day-to-day independence hampers its ability to comment effectively on divergences between stated objectives and actual policies at the national level. And it lacks the legitimacy to be an effective secretariat.”
King said the fund would have better focus if it concentrated on global economic and monetary stability, and, to foster greater independence, ”serious consideration should be given to a non-resident board, meeting some six to eight times a year with directors comprising senior finance ministry or central bank officials”. At present, the IMF is controlled by the leading industrial nations. — Â