IMF reform needed
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A global recovery that was faster and broader than expected is seemingly giving rise to widespread optimism that policymakers can now pat themselves on the back. However, if key reforms of global economic and financial systems are not deepened quickly, such optimism may prove rather premature.
That is why it was necessary for the G20 finance chiefs and central bankers last Friday to call for a speedy reform of the International Monetary Fund (IMF).
To accelerate the process of shifting its quota to emerging markets and developing countries is a crucial step in enhancing the fund's legitimacy and effectiveness. It is more than obvious that a more reasonable governance structure for the fund will enable it to better protect global economic and financial stability by initiating a series of important reforms.
According to the IMF's latest World Economic Outlook report, growth speeds of developing countries are and will be much faster than the advanced economies, meaning their weight in the global economy is increasing dramatically. But the quota of the developing countries in the IMF remains underrepresented.
By stressing the need to tackle financial sector reform around the world more quickly, IMF has displayed the capacity to come to grips with the major problems of the world economy.
It shows that the fund has correctly recognized that the current global recovery based on massive government bailouts has created a window of opportunity to accelerate, not delay, key reforms of the global economic and financial systems.
That the United States is to carry out a fundamental financial regulation overhaul highlights the necessity of more international coordination. If the IMF is to assume its due role in such reforms, it should reform itself with no less sense of urgency.
