## _wp06273

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### I. Introduction — governance legitimacy and the need for quota reform
- Globalization requires a less fragmented 21st-century regulatory framework; the IMF is expected to play major roles and has already taken steps (evaluating compliance with international data standards, new surveillance remit, multilateral consultation on global imbalances).
- Credibility concerns: quotas, voting rights, and voice imbalances “have become progressively worse.”
- Key criticisms of current IMF practice:
  - Members’ quotas increasingly out of line with countries’ economic weight (measured by GDP).
  - Important aspects of members’ economic weight and other variables relevant to voting rights are not captured in current quota formulas.
  - A two-stage process was adopted for quota/voice reform: initial ad hoc increases for clearly underrepresented members (first stage) and more fundamental reforms (second stage).
  - Using the existing quota formulas (widely regarded as faulty) to select ad hoc increases is characterized as putting “the cart before the horse.”
- Procedural/substantive concerns:
  - First-stage ad hoc increases covered only four countries (China, Korea, Mexico and Turkey) as identified by the faulty formulas.
  - Faults cited: use of market exchange rates rather than purchasing power parity to derive GDP, collinearity among variables, multiple quota formulas, and nonlinearities in the quota formula.
  - Three of the four countries that received ad hoc increases (Korea, Mexico, Turkey) had quotas calculated using new formulas that give a lower weight to GDP (new formulas have GDP coefficient ranging from 0.0045-0.0065 vs the Bretton Woods coefficient of 0.01).
- Normative framing and policy implication:
  - Authors adopt a Rawlsian “justice as fairness” perspective: justifiable IMF governance requires a distribution of voting power that participants accept as the end-result of a fair process.
  - Major revision of the quota formulas is long overdue; basic votes should be increased sharply—“to at least restore its importance at the inception of the IMF”—and quota formulas revamped to allow selective quota increases for a broad group of developing countries.
  - The paper advances options for discussion; numerical ranges in quota tables are heuristic and not specific recommendations.
- Scope and exclusions:
  - Focus is quotas and voice; does not address voting majorities, constituency system efficacy, converting the IMFC into a decision-making council, or Executive Board independence/accountability in depth.
  - Reaffirms need for expedited improvements in capacity for African Executive Directors’ offices and more transparent selection for Managing Director, but treats these as distinct from quota/voice reform.

### II. Quotas, roles, and the mechanics of quota formulas
- Functions and exact figures:
  - Total quotas at end-September 2006 were SDR 213 billion.
  - Subscriptions: members must pay quota in full upon joining; up to 25 percent in SDRs or widely accepted currencies (U.S. dollar, euro, yen, pound sterling), remainder in member’s own currency.
  - Voting power: each IMF member has 250 basic votes plus one additional vote for each SDR 100,000 of quota.
  - Access to financing: under Stand-By and Extended Arrangements, a member can borrow up to 100 percent of its quota annually and 300 percent cumulatively (access may be higher in exceptional circumstances).
  - SDR allocations: members’ shares of general SDR allocations are proportional to quota.
- Tension from multiple purposes:
  - Quotas balance competing considerations (financial contributions, access, voting power, SDR share); authors argue no need for a rigid relation among these functions and note reasons to delink SDR allocations from quotas.
  - A cogent case can be made for fully delinking quotas from all decisions on access, but doing so would require an amendment to the Articles and has received little support.
- Historical evolution and critique of formulas:
  - Bretton Woods formula (origins described): five variables with GDP (national income) given large weight historically; politically constructed and not transparently distributed.
  - Subsequent multilayered formula system with ten effective formulas, simplified in 1981–82 but retaining multiple formulas and adjustment procedures.
  - Main critiques:
    - Overburdened by multiple roles, mixing variables and objectives inappropriately.
    - Variable choices and weighting problematic (Bretton Woods GDP coefficient 0.01 versus new formulas’ 0.0045-0.0065).
    - Multiple formulas and nonlinearities produce skewed and inconsistent results.
    - Use of market exchange rates rather than PPP to derive GDP is identified as incorrect for the task.

### III. Quota formulas: explicit formulas, variables, and calculation rules
- Five quota formulas (as presented):
  - Reduced Bretton Woods formula:
    - (0.01Y + 0.025R + 0.05P + 0.2276VC) x (1 + C/Y)
  - Scheme III formula:
    - (0.0065Y + 0.0205125R + 0.078P + 0.4052VC) x (1 + C/Y)
  - Scheme IV formula:
    - 0.0045Y + 0.03896768R + 0.07P + 0.76976VC) x (1 + C/Y)
  - Scheme M4 formula:
    - 0.005Y + 0.042280464R + 0.044 (P + C) + 0.8352VC
  - Scheme M7 formula:
    - 0.0045Y + 0.05281008R + 0.039 (P + C) + 1.0432VC
- Note: There have been no changes in the formulas since 1983.
- Variables and definitions:
  - Y = GDP at current market prices for a recent year
  - R = twelve-month average of gold, foreign exchange reserves, SDR holdings and reserve positions in the IMF, for a recent year
  - P = annual average of current payments (goods, services, income, and private transfers) for a recent five-year period
  - C = annual average of current receipts (goods, services, income, and private transfers) for a recent five-year period
  - VC = variability of current receipts, defined as one standard deviation from the centered five-year moving average, for a recent 13-year period
- Calculation and adjustment procedure:
  - For each of the four non-Bretton Woods formulas, quota calculations are multiplied by an adjustment factor so that the sum of the calculations across members equals that derived from the Bretton Woods formula.
  - The calculated quota of a member is the higher of:
    - the Bretton Woods calculation, and
    - the average of the lowest two of the remaining four calculations (after adjustment).
- Critique of the multi-formula approach:
  - Multiplicity produces absence of uniformity of treatment across members.
  - Weight of GDP differs across formulas; GDP treated inconsistently.
  - Market-exchange-rate GDP used rather than PPP-based GDP.
  - Final selection rule (higher of Bretton Woods and average of lowest two adjusted others) is described as confusing and potentially objectionable.

### IV. Variables: supply, demand, vulnerability, and normative tests
- Starting premise: QFRG’s suggested criteria (changes in world economy, consistency with quota functions, simplicity and transparency) used as baseline; paper goes further to analyze additional variables and proposes a new approach to address democracy deficit and legitimacy problems.
- Economic size (GDP)
  - Advanced countries favor using the three-year average of GDP at market exchange rates.
  - Most economists would agree that PPP-based GDP is more appropriate.
  - Three-year average benefits industrial countries by postponing catching-up effect of fast-growing emerging markets and LICs.
  - Progress in PPP data compilation for developing countries noted.
- Openness
  - Specified as absolute sum of current receipts and current payments, averaged over a five-year period.
  - Debate on including financial openness; trade within currency unions can exaggerate openness.
  - Openness intended to capture demand for IMF resources, but better proxies exist.
- Variability
  - Variability of current receipts and net capital flows warranted to capture vulnerability and potential IMF resource demand.
  - Preference for specifying variability as deviations from a three-year average to smooth trends.
- Reserves
  - Argument for retaining reserves as an indicator of financial strength and adequacy.
  - Counterargument: for members with capital market access and floating exchange rates, reserves may be of declining importance.
- Capital flows / vulnerability
  - Current formulas estimate vulnerability mainly to current account shocks, yet many crises are capital account crises.
  - Staff-proposed capital flow variables have shortcomings (gross flows or volatility measures not normalized).
  - Recommendation: measure net capital flows as a proportion of the size of the economy—volatility of capital flows as a proportion of GDP.
  - Recognize qualitative differences between capital flows in industrial vs emerging markets (Caballero-Krishnamurthy model) and “original sin” (external debt in foreign currency) in emerging markets.
- Improved demand metrics proposed (modified YMZ approach):
  - Start with group receiving concessional financing (PRGF) and broaden to include emerging markets without investment grades.
  - Replace YMZ second criterion (reserves to imports) with a broader set: reserves to short-term debt, financing gaps, monetary base (or money supply) ratios, sovereign bond spreads.
  - Use of reserves to short-term debt follows Guidotti and Greenspan; empirical crisis-prediction models support its importance.
  - A weighted average of several demand indicators could be used, acknowledging high correlations.
- Methodological and normative conclusions:
  - Simple ready-made variables can misfit specific situations; capital account differences imply different treatment for industrial vs developing countries.
  - Quota formulas should balance simplicity with capturing substantive objectives: “Quota formulas should be made as simple as possible but not simpler.”
  - Rawlsian ordering proposed (lexicographic):
    - First principle: each country gets an equal right to a meaningful percentage of total quotas (Westphalian principle) and population determines a percentage of voting power (democracy principle) compatible with IMF purposes.
    - Second principle: remaining quota apportioned based on (i) economic size/ability to contribute and (ii) need to borrow (external vulnerability and predictors of IMF borrowing).

### V. Basic votes, legitimacy, and operational implications
- Historical compromise:
  - Each member’s voting power: two hundred and fifty votes plus one additional vote for each part of its quota equivalent to one hundred thousand special drawing rights (Article XII, Section 5(a)).
  - Basic votes originally significant; erosion over time due to quotas increasing while basic votes unchanged.
- Quantitative erosion and implications:
  - IMF quotas increased 37-fold while basic votes remained unchanged.
  - Basic votes declined from 11.3 percent to 2.1 percent of total voting power.
  - For original members, basic votes declined to 0.5 percent (metric relevant to Westphalian principle).
- Importance of restoring basic votes:
  - Restoring or increasing the share of basic votes to levels such as 11.3 percent, or the maximum of 15.8 percent (reached in 1958) is described as “of the utmost importance” for legitimacy.
  - Current proposals for increasing basic votes span a wide range: returning to 15.8 percent vs a mere doubling.
- Recent commitments and mechanisms:
  - Mechanism keeping ratio of basic votes to total voting power constant as quotas increase has garnered broad support.
  - Commitment in the first stage of reforms: at least double the basic votes and establish a mechanism to keep the ratio of basic votes to total voting power constant as quotas increase.
  - Doubling basic votes would take the share to 4 percent (compared with 11.3 percent at IMF inception); the paper considers 4 percent tepid and insufficient under a Rawlsian approach.
- Legal and technical basis:
  - Restoring basic votes requires an amendment of the Articles of Agreement; Fourth Amendment remains unratified a decade after approval, illustrating uncertain commitment to amendments.
  - Alternatives (e.g., adding a constant to the quota formula) risk being backdoor solutions that fail to address smallest members’ grievance.
- Key risks to IMF’s core mission:
  - Rising foreign currency stockpiles in Asia and other developing countries involve high financial and opportunity costs; self-insuring via reserves far in excess of fundamentals.
  - These reserve accumulations imply perceived shortcomings in IMF crisis prevention/resolution and criticisms of IMF conditionality.
  - If not addressed by facilities adapted to insurance-type needs and quota/voice reform, trend could jeopardize IMF relevance and encourage regional arrangements (e.g., Chiang Mai Initiative).

### VI. Policy implications and concrete recommendations
- Overarching recommendation:
  - Revamp quota formulas comprehensively before or as part of any ad hoc quota adjustments to ensure a fair and defensible allocation of voting power.
- Specific recommendations (explicit and implied):
  - Increase basic votes sharply—to at least restore their relative importance at the IMF’s inception.
  - Adopt a holistic approach: simultaneously address basic votes, quota formula revision, and selective quota increases across a broad set of developing countries to reduce democracy and Westphalian deficits.
  - Consider delinking some quota functions (e.g., SDR allocations, access) from quotas to reduce overload on quota formulas—recognizing that some reforms would require Articles amendment and political support.
  - Replace or supplement traditional demand variables (openness, variability) with variables that better correlate with actual IMF resource use (e.g., past IMF-supported programs, subinvestment grade credit rating, sovereign spreads, reserves metrics).
  - Adopt PPP-based GDP for the supply side metric or explicitly evaluate a weighted compromise between PPP and market-exchange-rate GDP under an agreed normative framework.
  - Resolve basic votes issue either by Articles amendment or by an explicit mechanism that safeguards the share of basic votes in total voting power as quotas rise.
  - Ensure LICs receive adequate voice and representation commensurate with the IMF’s role in their economies, including consideration of larger basic votes and mechanisms for protecting their voting share.
  - Use the Rawlsian original position and overlapping consensus as a guiding framework to achieve legitimacy-enhancing, durable quota and governance reforms.
- Heuristic weight ranges and variable lists proposed:
  - Basic vote I Westphalian Principle: 4-15 (percentage votes) (heuristic range)
  - Basic vote II Democracy Principle: 5-10 (percentage votes) (heuristic range)
  - Supply Variables weight range: 45-55 (percentage)
    - PPP-Based GDP
    - International reserves
  - Demand Variables weight range: 25-35 (percentage)
    - Current payments or receipts and capital flows
    - Variability of current receipts and capital flows
    - Past IMF-supported programs
    - Capital flows/GDP
    - Subinvestment grade credit rating
    - Sovereign bond spreads
    - Reserves/short-term debt
    - Reserves/financing gap
    - Reserves/monetary base
  - Notes on variable selection:
    - PPP-based GDP favored as first-best supply metric because quotas are small fraction of GDP and nontradables need not be converted at market exchange rates.
    - Market-exchange-rate GDP currently used overstates advanced economies’ shares: share in global totals of GDP converted at market exchange rates is over 3/4; declines to about 1/2 for PPP-based GDP.
    - Traditional demand variables (openness, variability) have weak and declining correlation with actual IMF resource use; new demand variables are better predictors but correlated among themselves.
    - Possible modeling approaches: select low-correlation subset; include many with low individual weights; construct a hybrid variable combining information to address multicollinearity and missing data.
    - Moral hazard concerns about including some demand variables acknowledged but judged unlikely to be decisive.

### VII. Selected quantitative facts and appendix highlights
- Membership and budget:
  - IMF membership: 184 countries (as cited).
  - Surveillance activities take up more than one-quarter of the IMF’s administrative budget.
- Quotas and basic votes:
  - Total quotas at end-September 2006 were SDR 213 billion.
  - IMF quotas increased 37-fold while basic votes remained unchanged.
  - Basic votes declined from 11.3 percent to 2.1 percent of total voting power; for original members basic votes declined to 0.5 percent.
  - Doubling basic votes would take the share to 4 percent (compared with 11.3 percent at IMF inception).
- Supply vs demand weight ranges (heuristic):
  - Supply Variables weight range: 45-55 (percentage).
  - Demand Variables weight range: 25-35 (percentage).
- Selected Appendix table (excerpted data, units as presented):
  - United States Actual Quotas: 37149.30 (In million of SDRs); Actual Quotas Shares: 17.382; Calculated Quotas: 16.795
  - China Actual Quotas: 6369.20; Actual Quotas Shares: 2.980; Calculated Quotas: 5.197
  - India Actual Quotas: 4158.20; Actual Quotas Shares: 1.946; Calculated Quotas: 1.200
  - Japan Actual Quotas: 13312.80; Actual Quotas Shares: 6.229; Calculated Quotas: 7.525
  - United Kingdom Actual Quotas: 10738.50; Actual Quotas Shares: 5.025; Calculated Quotas: 5.176
  - France Actual Quotas: 10738.50; Actual Quotas Shares: 5.025; Calculated Quotas: 4.334
  - Germany Actual Quotas: 13008.20; Actual Quotas Shares: 6.087; Calculated Quotas: 6.953
  - Russia Actual Quotas: 5945.40; Actual Quotas Shares: 2.782; Calculated Quotas: 1.519
  - Saudi Arabia Actual Quotas: 6985.50; Actual Quotas Shares: 3.269; Calculated Quotas: 1.063
  - Brazil Actual Quotas: 3036.10; Actual Quotas Shares: 1.421; Calculated Quotas: 0.998
  - Mexico Actual Quotas: 2585.80; Actual Quotas Shares: 1.210; Calculated Quotas: 1.928
  - Canada Actual Quotas: 6369.20; Actual Quotas Shares: 2.980; Calculated Quotas: 3.098
- Appendix data basis:
  - Appendix data is based on 1992-2004 data and reflects adjustments to current receipts and payments for re-exports, international banking interest, and non-monetary gold.

*Source: _wp06273 (excerpted content).*

### References..............................................................................................................

### _wp06273 - References..............................................................................................................

### I. Introduction — governance legitimacy and the need for quota reform
- Globalization requires a less fragmented 21st-century regulatory framework; the IMF is expected to play major roles and has already taken steps (e.g., evaluating compliance with international data standards, new surveillance remit, multilateral consultation on global imbalances).
- Credibility concerns: quotas, voting rights, and voice imbalances “have become progressively worse.”
- Key criticisms of current IMF practice:
  - Members’ quotas have become increasingly out of line with countries’ economic weight (measured by GDP).
  - Important aspects of members’ economic weight and other variables relevant to voting rights are not captured in current quota formulas.
  - The IMF adopted a two-stage process for quota and voice reform: initial ad hoc increases for clearly underrepresented members (first stage) and more fundamental reforms (second stage).
  - Using the existing (and widely regarded as faulty) quota formulas to select ad hoc increases puts “the cart before the horse.”
- Specific procedural and substantive concerns:
  - The first-stage ad hoc increases covered only four countries (China, Korea, Mexico and Turkey) as identified by the faulty formulas.
  - Faults in the formulas cited include: use of market exchange rates rather than purchasing power parity to derive GDP, collinearity among variables, multiple quota formulas, and nonlinearities in the quota formula.
  - Three of the four countries that received ad hoc increases (Korea, Mexico, Turkey) had quotas calculated using new formulas that give a lower weight to GDP (new formulas have GDP coefficient ranging from 0.0045-0.0065 vs the Bretton Woods coefficient of 0.01).
- Normative framing:
  - Authors adopt a Rawlsian “justice as fairness” perspective: justifiable IMF governance requires a distribution of voting power that participants accept as the end-result of a fair process.
  - Policy implication: a major revision of the quota formulas is long overdue; basic votes should be increased sharply—“to at least restore its importance at the inception of the IMF”—and quota formulas revamped to allow selective quota increases for a broad group of developing countries.
  - The paper advances options for discussion; numerical ranges in the quota table are heuristic and not specific recommendations.
- Scope and exclusions:
  - Focus is quotas and voice; does not address voting majorities, constituency system efficacy, converting the IMFC into a decision-making council, or Executive Board independence/accountability in depth.
  - Reaffirms need for expedited improvements in capacity for African Executive Directors’ offices and more transparent selection for Managing Director, but treats these as distinct from quota/voice reform.

### II. Quotas, voice, and Rawls — role of quotas and critiques of formula mechanics
- Quotas’ multifaceted functions and exact figures:
  - Total quotas at end-September 2006 were SDR 213 billion.
  - Subscriptions: members must pay quota in full upon joining; up to 25 percent in SDRs or widely accepted currencies (U.S. dollar, euro, yen, pound sterling), remainder in member’s own currency.
  - Voting power: each IMF member has 250 basic votes plus one additional vote for each SDR 100,000 of quota.
  - Access to financing: under Stand-By and Extended Arrangements, a member can borrow up to 100 percent of its quota annually and 300 percent cumulatively (access may be higher in exceptional circumstances).
  - SDR allocations: members’ shares of general SDR allocations are proportional to quota.
- Tension from multiple purposes:
  - Quotas balance competing considerations (financial contributions, access, voting power, SDR share); authors argue no need for a rigid relation among these functions and note that there are good reasons to delink SDR allocations from quotas.
  - A cogent case can be made for fully delinking quotas from all decisions on access, but doing so would require an amendment to the Articles and has received little support.
- Historical evolution of quota formulas:
  - 1944 Bretton Woods formula: five variables—national income, official reserves, imports, export variability, ratio of exports to national income.
  - Early 1960s: moved to multi-formula approach—original formula supplemented with four more formulas with larger weights for external trade and external variability; use of two data sets produced effectively ten formulas.
  - 1981–82 simplifications included:
    - Eliminating five of ten formulas by focusing on one data set.
    - Replacing nominal income with GDP.
    - Broadening reserves to include holdings of SDRs, ECUs, and IMF reserve positions and computing as a 12-month average.
    - Reducing coefficient of variability in four derivative formulas by 20 percent to moderate impacts of commodity price spikes (notably 1973/74 and 1979 oil price increases).
  - The Bretton Woods formula still applies to more than one-third of members, including many developing countries; some industrial countries (including one G-7 country) calculate quotas using the new formulas.
- Main critiques of the formulas highlighted:
  - Overburdened by the multiple roles of quotas, leading to inappropriate mixing of variables and objectives.
  - Problematic variable choices and weighting (e.g., GDP weighting differences across formulas; Bretton Woods GDP coefficient 0.01 versus new formulas’ 0.0045-0.0065).
  - Multiple formulas and nonlinearities produce skewed and inconsistent results; inappropriate metrics produced misleading identification of underrepresented members in the first-stage ad hoc increases.
  - Use of market exchange rates rather than purchasing power parity to derive GDP is criticized.

### Policy implications and recommendations (from text)
- Revamp quota formulas comprehensively before or as part of any ad hoc quota adjustments to ensure a fair and defensible allocation of voting power.
- Increase basic votes sharply—to at least restore their relative importance at the IMF’s inception—to strengthen representation of smaller members.
- Adopt a holistic approach: simultaneously address basic votes, quota formula revision, and selective quota increases across a broad set of developing countries to reduce democracy and Westphalian deficits.
- Consider delinking some quota functions (e.g., SDR allocations, access) from quotas to reduce overload on quota formulas—recognizing that some reforms would require Articles amendment and political support.

*Source: _wp06273 - References (excerpted text).*

### Appendix Table). There have been no changes in the formulas since 1983, and the current

### _wp06273 - Appendix Table). There have been no changes in the formulas since 1983, and the current

### Quota formulas (five formulas)
- Reduced Bretton Woods formula:
  - (0.01Y + 0.025R + 0.05P + 0.2276VC) x (1 + C/Y)
- Scheme III formula:
  - (0.0065Y + 0.0205125R + 0.078P + 0.4052VC) x (1 + C/Y)
- Scheme IV formula:
  - 0.0045Y + 0.03896768R + 0.07P + 0.76976VC) x (1 + C/Y)
- Scheme M4 formula:
  - 0.005Y + 0.042280464R + 0.044 (P + C) + 0.8352VC
- Scheme M7 formula:
  - 0.0045Y + 0.05281008R + 0.039 (P + C) + 1.0432VC

- Note: There have been no changes in the formulas since 1983.

### Variables and definitions
- Y = GDP at current market prices for a recent year
- R = twelve-month average of gold, foreign exchange reserves, SDR holdings and reserve positions in the IMF, for a recent year
- P = annual average of current payments (goods, services, income, and private transfers) for a recent five-year period
- C = annual average of current receipts (goods, services, income, and private transfers) for a recent five-year period
- VC = variability of current receipts, defined as one standard deviation from the centered five-year moving average, for a recent 13-year period

### Calculation and adjustment procedure
- For each of the four non-Bretton Woods formulas, quota calculations are multiplied by an adjustment factor so that the sum of the calculations across members equals that derived from the Bretton Woods formula.
- The calculated quota of a member is the higher of:
  - the Bretton Woods calculation, and
  - the average of the lowest two of the remaining four calculations (after adjustment).

### Critique of the multi-formula approach
- Observations from the text:
  - The multiplicity of formulas produces an absence of uniformity of treatment across members.
  - The weight of the GDP variable differs across the formulas, so GDP does not receive the same treatment for all countries.
  - The GDP measure used is GDP at current market prices converted using market exchange rates rather than PPP-based GDP; the text identifies this as incorrect for the task.
  - Other variables also have problems (discussed further in Section III, starting with the GDP variable).
- Conceptual issues highlighted:
  - The final selection rule for the calculated quota (higher of Bretton Woods and the average of the lowest two of the adjusted remaining four) is described as confusing and potentially objectionable.
  - The existence of several formulas that use basically the same set of variables raises a question about the need for such complexity.

### Historical origin and political construction of the original Bretton Woods formula
- Origin narrative (Mikesell, US Treasury):
  - In mid-April 1943, White asked Mikesell to prepare a formula based on gold and dollar holdings, national incomes, and foreign trade, with political objectives for quota shares.
  - White requested quotas roughly: United States ≈ US$2.9 billion; United Kingdom (including its colonies) ≈ half the U.S. quota; Soviet Union just under the United Kingdom; China somewhat less; total quotas ≈ US$10 billion.
  - Mikesell acknowledged using crude estimates for missing data and adjusting weights to achieve predetermined quotas: “I confess to having exercised a certain amount of freedom in making these estimates in order to achieve predetermined quotas.”
  - Mikesell’s final formula narrative: “The final formula for determining quotas was 2 percent of national income, 5 percent of gold and dollar holdings, 10 percent of average imports, 10 percent of the maximum variation in exports, and these three percentages increased by the percentage ratio of average exports to national income.”
- Consequences and critique:
  - The introduction of nonlinearity (multiplicative factor increasing role of exports relative to national income) made clear economic interpretation impossible.
  - The quota formula was not distributed initially; its political motivations were concealed: “The quota formula was not distributed, and White asked me not to reveal it.”
  - Delegates recognized the process as more political than scientific.
  - The text concludes the Bretton Woods formula lacked appropriate economic grounding and transparency.

### Normative comparison: Rawls’s original position and Nozick’s entitlement theory
- Rawlsian critique:
  - The Bretton Woods formula is contrasted with Rawls’s “original position” and the veil of ignorance; the formula is characterized as far from Rawlsian fairness because it was tailored to political objectives rather than impartial trusteeship.
  - Rawls’s method: choice behind a veil of ignorance where trustees do not know morally irrelevant facts (e.g., population, national output, level of development) to derive just principles.
  - The process used in designing the Bretton Woods quotas is described as inconsistent with Rawls’s procedural justice and reflective equilibrium.
- Nozickian critique:
  - The quota formulas do not meet Nozick’s entitlement theory either, because they were not derived from rules of acquisition, transfer, and rectification; rather they were “the numbers decided by Secretary White.”
  - The calculated quotas lack the “appropriate history” that Nozick’s theory would require.

### Quota Formula Review Group (QFRG) and its recommendations
- QFRG convened in 1999 to review quota formulas; chaired by Professor Richard Cooper (Harvard University).
- QFRG recommended a single formula with two variables:
  - GDP as a measure of the ability to contribute resources to the IMF (GDP variable to have the larger weight).
  - variability of current receipts and net long-term capital flows as a measure of external vulnerability.
- Critiques of QFRG recommendations in the text:
  - The specific formula recommended pointed toward a greater concentration of quotas among the largest industrial countries, contrary to objectives to give more voice to emerging countries and low-income and small countries.
  - The QFRG’s GDP choice uses market exchange rates rather than PPP-based GDP; the text identifies PPP-based GDP as superior for this task.
  - The QFRG variability measure did not reflect vulnerability to short-term capital shocks and did not account for differences in capital account disruptions between developing and advanced economies.
- Institutional concerns noted:
  - Difficulties remain in agreeing precise weights for variables.
  - Many Directors, particularly from developing countries, worry that the voice and quota debate is being narrowed and that some important issues are not being addressed.
- Procedural note from IMF staff papers:
  - In June 2002, Executive Directors reached understandings on broad principles for an alternative quota formula, endorsing a simpler and more transparent specification, limiting consideration to three or four variables used in existing quota formulas (including GDP, a measure of openness, variability, and possibly international reserves).

*Source: _wp06273 - Appendix Table). There have been no changes in the formulas since 1983, and the current*

### conclusions in the July 2003 discussion on quota-related topics.”

### _wp06273 - conclusions in the July 2003 discussion on quota-related topics.

### Variables in the Quota Formulas
- Starting premise: QFRG’s suggested criteria—focus on variables that reflect changes in the world economy, consistency with the multiple functions of quotas, and simplicity and transparency—used as a baseline, but paper goes further to analyze additional variables and proposes a new approach to quota formulas aimed at addressing democracy deficit and legitimacy problems.

- Economic size (GDP)
  - Advanced countries favor using the three-year average (in lieu of the recent year) of GDP at market exchange rates as the most important variable.
  - Most economists would agree that using purchasing power parity rather than market exchange rates to derive GDP would be the more appropriate procedure.
  - The proposal of using a three-year average for GDP works to the advantage of the industrial countries because it postpones the incorporation into the quota formula of the catching-up effect on the GDP variable of the fast-growing emerging market economies and LICs.
  - Progress has been made in compiling PPP-based GDP for developing countries (McLenaghan (2005) referenced), reducing concerns about data availability.

- Openness
  - Specified as the absolute sum of current receipts and current payments, averaged over a five-year period, to reflect integration in the world economy.
  - There is support for broadening openness to include financial openness, although data difficulties remain.
  - Major problem: treatment of trade within currency unions (e.g., intra-EU trade, euro adoption from 1999) can exaggerate openness; IMF staff have excluded some items historically (interest payments, entrepôt trade) but debate on currency-union trade adjustments has proceeded slowly.
  - Openness is meant to capture demand for IMF resources, but better proxies exist with higher correlations to actual IMF resource use.

- Variability
  - Inclusion of a measure of variability of current receipts and net capital flows is warranted to capture vulnerability to balance-of-payments shocks and potential demand for IMF resources.
  - General support for specifying variability as deviations from a three-year average to smooth trends while capturing fluctuations.
  - Strong case for supplementing variability with other demand-capturing variables.

- Reserves
  - Argument for retaining reserves as an indicator of members’ financial strength and consistent with emphasis on adequacy of international reserves.
  - Counterargument: for members with capital market access and floating exchange rates, reserves may be of declining importance and could be excluded.
  - High reserves can indicate both demand and supply aspects of IMF resources and ought to be retained.

### Reflective Equilibrium and Justice Principles (Rawlsian analysis)
- Problem framing
  - Scarcity of supply relative to demand for IMF quotas, and absence of a price mechanism to equate supply and demand, implies distributional principles are necessary.
  - Quotas are not traded; no market-clearing price exists. IMF differs from commercial firms where market mechanisms operate.

- Rawls test application
  - Rawlsian "original position" and veil of ignorance used to evaluate fairness of quota variables.
  - Openness fails the test: some high-openness countries benefiting in quota shares have had no need for IMF resources for the last 25 years; some never borrowed from the IMF.
  - Straightforward alternative: include a variable reflecting history of borrowings and/or external vulnerability (credit ratings, sovereign spreads).

- Conditionality and governance implications
  - Present quota formulas are poorly designed to capture likelihood of borrowing; debtor interests were insufficiently considered.
  - Overloaded conditionality in programs (example: Asian crisis programs with >100 performance criteria) tied to dominance of industrial countries in Board—industrial countries have over 60 percent of the votes in the Executive Board.
  - Alan Blinder quote (summarized): IMF should give greater weight to social safety nets and not bail out foreign creditors while local populations suffer.

- Population and democracy principle
  - Population is excluded from quota formulas despite available data; arguments that population is proxied by GDP/external receipts fail for three reasons:
    - If population is the variable of interest, use the direct data rather than proxies.
    - Correlation coefficient between population and PPP-based GDP is higher than with market-exchange-rate GDP.
    - GDP and international receipts capture economic size and borrowing potential, not the democratic worth of persons; population embodies the "one person, one vote" principle not captured by these economic variables.
  - IMF Board trending toward a simpler formula with three or four updated variables (GDP, openness, variability, possibly reserves) but little progress on new metrics (PPP vs market exchange rates) or on including population.

- Capital flows / vulnerability
  - Current quota formulas estimate vulnerability mainly to current account shocks (trade openness, export volatility) but many crises are capital account crises.
  - Staff-proposed capital flow variables have shortcomings: gross flows or volatility measures not normalized across countries; do not capture macroeconomic vulnerability or resources needed to stabilize a country.
  - Recommendation: measure net capital flows as a proportion of the size of the economy—volatility of capital flows as a proportion of GDP (dos Rios (2005) evaluation).
  - Recognize qualitative differences between capital flows in industrial vs emerging markets (Caballero-Krishnamurthy (C-K) model): international vs domestic collateral distinction; emerging markets may face international liquidity constraints even with domestic collateral.
  - Emerging markets often have external debt denominated in foreign currency ("original sin"), increasing vulnerability.

- Improved demand metrics proposed
  - Modified YMZ approach: for demand-side variable, start with group receiving concessional financing (PRGF) and broaden by including emerging markets without investment grades.
  - Replace YMZ second criterion (reserves to imports) with a broader set: reserves to short-term debt, financing gaps, monetary base (or money supply) ratios, sovereign bond spreads.
  - Use of reserves to short-term debt follows Guidotti and Greenspan; empirical crisis-prediction models support its importance.
  - A weighted average of several demand indicators could be used, acknowledging high correlations.

- Methodological and normative conclusions
  - Simple ready-made variables can misfit specific situations; capital account differences imply some variables should be treated differently for industrial vs developing countries.
  - Quota formulas should balance simplicity with capturing substantive objectives; moral and economic underpinnings are needed, not purely political.
  - "Quota formulas should be made as simple as possible but not simpler."
  - Rawlsian ordering proposed (lexicographic):
    - First principle: each country gets an equal right to a meaningful percentage of total quotas (Westphalian principle) and population determines a percentage of voting power (democracy principle) compatible with IMF purposes.
    - Second principle: remaining quota apportioned based on (i) economic size/ability to contribute and (ii) need to borrow (external vulnerability and predictors of IMF borrowing).

### Basic Votes
- Historical compromise at Bretton Woods: allocate 250 “basic votes” to each member to combine legal equality (one country, one vote) with votes tied to capital contributions (one vote per US$100,000 of quota subscribed).
- Erosion over time:
  - IMF quotas increased 37-fold while basic votes remained unchanged.
  - Basic votes declined from 11.3 percent to 2.1 percent of total voting power.
  - For original members, basic votes declined to 0.5 percent (the appropriate metric for the Westphalian principle because 2.1 percent includes new members).
- Implication: sharp reduction of small countries’ participation in decision-making and a need to consider restoration or reweighting of basic votes to preserve Westphalian and democratic principles.

*Conclusions in the July 2003 discussion on quota-related topics.*

### 11.3 percent, or the maximum of 15.8 percent (reached in 1958) is of the utmost importance

### _wp06273 - 11.3 percent, or the maximum of 15.8 percent (reached in 1958) is of the utmost importance

### Importance of basic votes and legitimacy
- Restoring or increasing the share of basic votes to levels such as 11.3 percent, or the maximum of 15.8 percent (reached in 1958) is described as "of the utmost importance" for the institution to gain legitimacy.
- Uncertainty exists about when this issue will be settled under the proposed approach.

### Sources of uncertainty in reform timing
- Current proposals for increasing basic votes span a wide range:
  - Some proposals call for returning to the historic high of 15.8 percent.
  - Other proposals suggest a mere doubling of the basic votes.
- This wide span of proposals contributes importantly to the uncertainty over resolution timing.

### Legal and technical basis for basic votes
- Article XII, Section 5(a) of the Fund’s Articles of Agreement specifies the basis for calculating voting power and the role of basic votes:
  - “[E]ach member shall have two hundred and fifty votes plus one additional vote for each part of its quota equivalent to one hundred thousand special drawing rights.”
  - The two hundred and fifty votes specified are generally referred to as “basic votes”.

### Observers' comparative points
- Some observers have argued that the relevant point of comparison is "11.3 percent to 2.1 percent" rather than to... 

*Source: _wp06273 - 11.3 percent, or the maximum of 15.8 percent (reached in 1958) is of the utmost importance*

### 0.5 percent because even under a pure “one country one vote” principle, the voting share of each country would

### _wp06273 - 0.5 percent because even under a pure “one country one vote” principle, the voting share of each country would

### Governance legitimacy and the basic votes problem
- The restoration of basic votes requires an amendment of the Articles of Agreement, which hinges on the strength of commitment of major shareholders to timing and implementation of the second stage reforms.
- The Fourth Amendment remains unratified a decade after approval, illustrating uncertain commitment to amendments.
- Alternatives to amendment (e.g., adding a constant to the quota formula) are possible but risk being a backdoor solution that fails to address the grievance of the smallest members.
- The IMF spends a disproportionately larger amount of resources on LICs relative to their quotas (because of adjustment programs and technical assistance), yet LICs are not effectively represented.
- A commensurate increase in quotas/voice for LICs would strengthen ownership of IMF programs and inputs into policy advice, financing, and technical assistance.

### Safeguarding basic votes and recent commitments
- A mechanism that keeps the ratio of basic votes to total voting power constant as quotas increase has garnered broad support, including in the Resolution of the Board of Governors on the recent ad hoc quota increase.
- A commitment in the first stage of IMF reforms: at least double the basic votes and establish a mechanism to keep the ratio of basic votes to total voting power constant as quotas increase.
- Doubling basic votes would take the share to 4 percent, down from 11.3 percent at IMF inception; the paper considers 4 percent tepid and insufficient under a Rawlsian approach.

### Key risks to the IMF’s core mission
- Rising foreign currency stockpiles in Asia and other developing countries involve high financial and opportunity costs; these countries are self-insuring via reserves far in excess of fundamentals.
- These reserve accumulations imply perceived shortcomings in IMF crisis prevention/resolution and have roots in criticism of IMF conditionality (e.g., 1997/1998 Asian financial crisis).
- If not addressed by adapting IMF facilities to insurance-type needs and by quota/voice reform, this trend could jeopardize IMF relevance and encourage regional arrangements.

### Adjusting voting power and quotas — principles and trade-offs
- Democracy and Westphalian principles should be considered together; over-weighting Westphalian principle without democracy risks violating Rawls’s test.
- Two-class basic votes approach proposed: Basic vote I (Westphalian Principle) and Basic vote II (Democracy Principle).
- The paper’s heuristic ranges for basic votes (not a specific proposal):
  - Basic vote I Westphalian Principle: 4-15 (percentage votes)
  - Basic vote II Democracy Principle: 5-10 (percentage votes)

### Variables and weight ranges for a rethought quota formula (supply and demand)
- Supply Variables weight range: 45-55 (percentage)
  - PPP-Based GDP
  - International reserves
- Demand Variables weight range: 25-35 (percentage)
  - Current payments or receipts and capital flows
  - Variability of current receipts and capital flows
  - Past IMF-supported programs
  - Capital flows/GDP
  - Subinvestment grade credit rating
  - Sovereign bond spreads
  - Reserves/short-term debt
  - Reserves/financing gap
  - Reserves/monetary base

- Notes on variables:
  - PPP-based GDP favored as the first-best metric for supply because quotas are a small fraction of GDP and nontradables need not be converted at market exchange rates to pay quotas.
  - Market-exchange-rate GDP currently used in formulas overstates advanced economies’ shares: share in global totals of GDP converted at market exchange rates is over 3/4 but declines to about 1/2 for PPP-based GDP.
  - Traditional demand variables (openness, variability) have weak and declining correlation with actual IMF resource use; new demand variables listed above are better predictors but exhibit correlation among themselves.
  - Possible modeling approaches: select low-correlation subset; include many with low individual weights; or construct a hybrid variable combining information to address multicollinearity and missing data.
  - Moral hazard concerns about including some demand variables are acknowledged but judged unlikely to be decisive: quotas are not so large an incentive as to drive imprudent national policies; similar concerns apply to reserve holdings.

### Aligning quotas and basic votes with Rawlsian “justice as fairness”
- Rawlsian original position and overlapping consensus provide a normative framework for selecting variables and weights: trustees behind a veil of ignorance would choose an IMF design minimizing the worst-off outcome.
- The paper emphasizes balancing equity and efficiency: efficiency criteria (proxy quality for characteristics) remain important but are insufficient without justice considerations.
- Current IMF quota formulas fail the Rawlsian test and require major rethinking, especially regarding choice of variables and the role of PPP-based GDP.

### Operational and institutional implications
- Quotas serve multiple purposes—contribution capacity, potential need for resources, and governance weight—and thus quota formulas must balance competing considerations.
- The traditional linkage between quotas and voting power as a reflection of financial contribution is misleading given the IMF’s broader surveillance, technical assistance, and global-public-good role.
- Surveillance activities account for more than one-quarter of the IMF’s administrative budget; IMF functions extend well beyond narrow financial transactions.
- Failure to address governance/justice concerns could marginalize the IMF and incentivize members to accumulate reserves or rely on regional arrangements (e.g., Chiang Mai Initiative).

### Conclusion and policy recommendations (implied and explicit)
- Resolve basic votes issue either by Articles amendment or by an explicit mechanism that safeguards the share of basic votes in total voting power as quotas rise.
- Move beyond ad hoc numerical fixes: determine appropriate shares for Westphalian and democracy principles and set explicit weights for supply and demand variables before locking in quota formulas.
- Replace or supplement traditional demand variables (openness, variability) with variables that better correlate with actual IMF resource use (e.g., past IMF-supported programs, subinvestment grade credit rating, sovereign spreads, reserves metrics).
- Adopt PPP-based GDP for the supply side metric or explicitly evaluate a weighted compromise between PPP and market-exchange-rate GDP under an agreed normative framework.
- Ensure LICs receive adequate voice and representation commensurate with the IMF’s role in their economies, including consideration of larger basic votes and mechanisms for protecting their voting share.
- Use the Rawlsian original position and overlapping consensus as a guiding framework to achieve legitimacy-enhancing, durable quota and governance reforms.

### Selected quantitative facts and figures cited
- Doubling of basic votes would take the share to 4 percent (compared with 11.3 percent at IMF inception).
- Supply Variables weight range: 45-55 (percentage).
- Demand Variables weight range: 25-35 (percentage).
- The share in global totals of GDP converted at market exchange rates is over 3/4; declines to about 1/2 for PPP-based GDP.
- Surveillance activities take up more than one-quarter of the IMF’s administrative budget.
- IMF membership: 184 countries (as cited).
- Appendix table: Actual quotas and shares (excerpt examples):
  - United States Actual Quotas: 37149.30 (In million of SDRs); Actual Quotas Shares: 17.382; Calculated Quotas: 16.795
  - China Actual Quotas: 6369.20; Actual Quotas Shares: 2.980; Calculated Quotas: 5.197
  - India Actual Quotas: 4158.20; Actual Quotas Shares: 1.946; Calculated Quotas: 1.200
  - Japan Actual Quotas: 13312.80; Actual Quotas Shares: 6.229; Calculated Quotas: 7.525
  - United Kingdom Actual Quotas: 10738.50; Actual Quotas Shares: 5.025; Calculated Quotas: 5.176
  - France Actual Quotas: 10738.50; Actual Quotas Shares: 5.025; Calculated Quotas: 4.334
  - Germany Actual Quotas: 13008.20; Actual Quotas Shares: 6.087; Calculated Quotas: 6.953
  - Russia Actual Quotas: 5945.40; Actual Quotas Shares: 2.782; Calculated Quotas: 1.519
  - Saudi Arabia Actual Quotas: 6985.50; Actual Quotas Shares: 3.269; Calculated Quotas: 1.063
  - Brazil Actual Quotas: 3036.10; Actual Quotas Shares: 1.421; Calculated Quotas: 0.998
  - Mexico Actual Quotas: 2585.80; Actual Quotas Shares: 1.210; Calculated Quotas: 1.928
  - Canada Actual Quotas: 6369.20; Actual Quotas Shares: 2.980; Calculated Quotas: 3.098
- Appendix data is based on 1992-2004 data and reflects adjustments to current receipts and payments for re-exports, international banking interest, and non-monetary gold.

*Source: Finance Department, International Monetary Fund (content from _wp06273 PDF).*

### REFERENCES

### _wp06273 - REFERENCES

### Works on IMF governance, quotas, and reform
- Boughton, James M., 2001, Silent Revolution: The International Monetary Fund, 1979-1989, (Washington: International Monetary Fund).
- Buira, Ariel, 2003, “The Governance of the International Monetary Fund,” Challenges to the World Bank and the IMF — Developing Countries Perspectives, Buira, Ariel (ed.).
- dos Reis, Laura, 2005, “Measuring Vulnerability: Capital Flows Volatility in the Quota Formula.” Reforming the Governance of the IMF and the World Bank, Buira, Ariel (ed.), pp. 195-212.
- International Monetary Fund, 2000a, External Review of Quota Formulas (EBAP/00/52, 5/1/00, Supplements 1 and 2, 5/1/00 and Supplement 3, 5/2/00) http://www.imf.org/external/np/tre/quota/2000/eng/qfrg/appb/index.htm.
- International Monetary Fund, 2000b, Staff Commentary on the External Review of Quota Formulas (EBAP/00/66, 6/7/00) http://www.imf.org/external/np/tre/quota/2000/eng/qfrg/comment/index.htm.
- International Monetary Fund, 2001a, IMF Executive Board Informally Discusses Quota Formulas, PIN No. 01/118, November 7, 2001, http://www.imf.org/external/np/sec/pn/2001/pn01118.htm.
- International Monetary Fund, 2001b, Alternative Quota Formulas—Considerations, Annex II, (SM/01/293, 9/27/01) http://www.imf.org/external/np/tre/quota/2001/eng/aqfc.htm.
- International Monetary Fund, 2002, Executive Board Discusses Further Considerations in the Twelfth General Review of Quotas, PIN No. 02/105, September 20, 2002 http://www.imf.org/external/np/sec/pn/2002/pn02105.htm.
- International Monetary Fund, 2005, “Quotas and Voice—Further Considerations,” SM/05/341, September 2, 2005, p. 29, http://www.imf.org/external/np/pp/eng/2005/090205a.pdf.
- Kelkar, L. Vijay, Praveen K. Chaudhry, Marta Vanduzer-Snow, and V. Bhaskar, 2005, “Reforming the International Monetary Fund: Toward Enhanced Accountability and Legitimacy.” Reforming the Governance of the IMF and the World Bank, Buira, Ariel (ed.), pp. 45-74.
- Le Fort V, Guillermo, 2005, “Issues on IMF Governance and Representation: An Evaluation of Alternative Options.” Reforming the Governance of the IMF and the World Bank, Buira, Ariel (ed.).
- McLenaghan, John B., 2005, “Purchasing Power Parities and Comparisons of GDP in IMF Quota Calculations.” Reforming the Governance of the IMF and the World Bank, Buira, Ariel (ed.), pp. 171-194.
- Portugal, Murilo, 2005, “Improving IMF Governance and Increasing the Influence of Developing Countries in IMF Decision-Making.” Reforming the Governance of the IMF and the World, Buira, Ariel (ed.), pp. 75-106.
- Truman, Edwin M., 2006, A Strategy for IMF Reform, Policy Analyses in International Economics Number 77, (Washington: Institute for International Economics) http://bookstore.petersoninstitute.org/merchant.mvc?Screen=PROD&Product_Code=3985
- Van Houtven, Leo, 2002, Governance of the IMF, (Washington DC: International Monetary Fund).
- Woods, N., 1998, “Governance in International Organizations: The Case of Reform in the Bretton Woods Institutions,” International Monetary and Financial Issues for the 1990, Geneva: UNCTAD, Vol. IX.
- Woods, N., 2001, “Making the IMF and the World Bank More Accountable,” International Affairs, 77.1.

### Analyses of capital flows, crises, and exchange-rate regimes
- Berg, Andrew, Eduardo Borensztein, Gian Maria Milesi-Ferretti, and Catherine Pattillo, 1999, “Anticipating Balance of Payments Crises: The Role of Early Warning Systems,” Occasional Paper No. 186, (Washington, D.C.: International Monetary Fund).
- Caballero, Ricardo, and Arvind Krishnamurthy, 2001, “International and Domestic Collateral Constraints in a model of Emerging Market Crises,” Journal of Monetary Economics, 48, pp. 513-548.
- Calvo, Guillermo, 1996, “Capital Flows and Macroeconomic Management: Tequilla Lessons,” International Journal of Finance and Economics, (July).
- Calvo, Guillermo, and Carmen Reinhart, 2000, “Fear of Floating,” Quarterly Journal of Economics, May, pp. 379-408.
- Chang, Roberto, and Andres Velasco, 1998, “Financial Crises in Emerging Markets: A Canonical Model,” NBER Working Paper W6606. http://papers.nber.org/papers/W6606.pdf.
- Chang, Roberto, and Andres Velasco, 2000, “Financial Fragility and the Exchange Rate Regime,” Journal of Economic Theory, XCII, pp. 1-34.
- Diamond, Douglas, and Philip Dybvig, 1983, “Bank Runs, Deposit Insurance, and Liquidity,” Journal of Political Economy, SCI, pp. 401-419.
- Eichengreen, Barry, and Ricardo Hausmann, 1999, “Exchange Rates and Financial Fragility,” NBER Working Paper W7418, http://papers.nber.org/papers/W7418.pdf.
- Flood, Robert, and Peter Garber, 1984, “Collapsing Exchange-rate Regimes: Some Linear Examples,” Journal of International Economics, No. 17, pp. 1-13.
- Krugman, Paul, 1979, “A Model of Balance of Payments Crises,” Journal of Money, Credit and Banking, XI, pp. 311-325.
- Krugman, Paul, 1999, “Balance Sheets, the Transfer Problem, and Financial Crises,” in International Finance and Financial Crises: Essays in Honor of Robert P. Flood, Jr. (Washington, D.C.: International Monetary Fund).
- Obstfeld, Maurice, 1994, “The Logic of Currency Crises,” Cahiers Economiques et Monétaires, XLIII, pp. 189-213.
- Obstfeld, Maurice, 1996, “Models of Currency Crises with Self-Fulfilling Features,” European Economic Review, XL, 1037-1047.
- Radelet, Steven and Jeffrey Sachs, 1998, “The Onset of the East Asian Financial Crisis,” Chapter 20 in National Bureau of Economic Research, Asian Crisis and International Solutions.

### Institutional, policy, and historical perspectives
- Blinder, Alan, 2003, “A New Global Financial Order: The Art of the Possible,” in D. Das (ed.) An International Finance Reader (London: Routledge), 2003, pp. 104-113 (an update and revision of “Eight Steps to a New Financial Order,” Foreign Affairs, September/October 1999).
- Feldstein, M., 1998, Refocusing the IMF, in Foreign Affairs, March–April.
- Kenen, Peter B., 2001, The International Financial Architecture: What's New? What's Missing?, (Washington: Institute for International Economics) http://bookstore.petersoninstitute.org/merchant.mvc?Screen=PROD&Product_Code=335.
- King, Mervyn, “Reform of the International Monetary Fund,” speech given at the Indian Council for Research on International Economic Relations (ICRIER) in New Delhi, India on 20 February 2006. Available at http://www.bankofengland.co.uk/publications/speeches/2006/speech267.pdf.
- Mikesell, R., 1994, “The Bretton Woods Debates: a Memoir, Essays in International Finance, Department of Economics, Princeton University, March, no. 192.
- Moggridge, Donald (ed.), 1980, The Collected Writings of John Maynard Keynes, Activities 1940-1944, Shaping the Post-War World: The Clearing Union. Volume XXV (Macmillan Cambridge University Press for the Royal Economic Society).
- Neiss, Hubert, “Conditionality and Program Ownership” Written Remarks during IMF Seminar on Conditionality, Tokyo, July 10, 2001.
- Van Houtven, Leo, 2002, Governance of the IMF, (Washington DC: International Monetary Fund).

### Philosophy, political theory, and justificatory frameworks referenced
- Macedo, Stephen, 1998, “The Politics of Justification,” Political Theory, v. 18, no. 2 (May, 1990), pp. 280-304. - reprinted in Public Reason, Fred D’Agostino and Gerald F. Gaus, eds., International Research Library of Philosophy (Ashgate Publishing: Aldershot, UK).
- Nozick, Robert, 1974, Anarchy, State, and Utopia, Basic Books, Inc.
- Nozick, Robert, 2001, Invariances: The Structure of the Objective World, Cambridge, Massachusetts: Harvard University Press, 2001.
- Rawls, John ,1987, “The Idea of an Overlapping Consensus,” Oxford Journal of Legal Studies 7 (Spring): pp.1-25.
- Rawls, John , 1988, “The Priority of Right and Ideas of the Good,” Philosophy and Public Affairs 17 (Fall): pp. 251-76.
- Rawls, John , 1989, “The Domain of the Political and Overlapping Consensus,” New York University Law Review 64 (May): pp. 233-55.
- Rawls, John , 1996, Political Liberalism, Paperback edition, with new Introduction. (New York: Columbia University Press).
- Rawls, John , 1999, A Theory of Justice, revised edition, (Cambridge, Mass.: Harvard University Press).

### Miscellaneous technical and allocation issues
- Yaqub, Muhammad, Azizali Mohammed, and Iqbal Zaidi, 1996, “A Focused SDR Allocation,” in Mussa, Michael, James M. Boughton, and Peter Isard, The Future of the SDR in Light of Changes in the International Financial System, (Washington DC: International Monetary Fund), pp. 202-216.

*Referenced list as provided in _wp06273 - REFERENCES.*

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