IMF Survey: IMF Stepping Up Focus on Global Systemic Stability

IMF News, October 9, 2010

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IMF will step up its focus on global systemic stability and is closer to wrapping up a package of reforms that will make the 187-member institution more representative.
Managing Director Dominique Strauss-Kahn said he expected IMF members to agree in either days or weeks on needed reform of the institution: “We are still not there, but not far off.”
Aim for a shift in quota share to dynamic emerging market and developing countries of at least five percent from over-represented to under-represented countries by January 2011.
Commitment to protecting the voting share of the poorest members.
Youssef Boutros-Ghali: “There has been extensive progress. All of the parties involved are converging toward a package that we think will move the institution toward a new level, make it more adaptable and capable of dealing with the problems that have become multilateral in most of their features.”
Strauss-Kahn emphasized countries receiving increased quota share must play a correspondingly bigger role in stabilizing the global economic system: “They cannot be at the center and be a free rider. The more they are at the center, then you need to take part in stabilizing the system. That is the logic.”

The IMFC said the economic recovery around the world was proceeding, but remains fragile and uneven across the membership.
IMFC communiqué: “Faced with this source of potential stress, we underscore our strong commitment to continue working collaboratively to secure strong, sustainable, and balanced growth and to refrain from policy actions that would detract from this shared goal.”
Ministers’ stated priorities:
- Address remaining financial sector fragilities.
- Ensure strong growth in private sector demand and job creation.
- Secure sound public finances and debt sustainability.
- Work toward a more balanced pattern of global growth, recognizing the responsibilities of surplus and deficit countries.
- Address challenges of large and volatile capital movements, which can be disruptive.
- Rejection of protectionism in all its forms must remain a key element of a coordinated response to the crisis.
- Renewed efforts urgently needed to bring the Doha trade talks to a successful conclusion.
Urgent action needed to reinforce the IMF’s role and effectiveness as a global body for macrofinancial surveillance and policy collaboration.

Strauss-Kahn: systemic stability is an issue of paramount importance, and the IMF is the institution best placed to address it.
IMF introducing new “Spillover Reports” that would assess the impact of policy actions in major economies for other parts of the world.
IMFC called for stronger and evenhanded surveillance to uncover vulnerabilities in large advanced economies.
Surveillance should be better focused on financial stability issues and their macroeconomic linkages, and more attentive to cross-border spillovers.

Strauss-Kahn said he will attend the concluding meetings of the annual Article IV surveillance missions to each of the systemic countries or regions—United States, United kingdom, the Euro area, China, and Japan.
Boutros-Ghali: reform of quotas, governance, composition and size of the Executive Board, and improvements in how the IMF monitors the global economy will make the institution better able to face the future.
The meeting was part of the IMF-World Bank Annual Meetings in Washington that have gathered around 10,000 central bankers, ministers of finance and development, private sector executives, labor leaders, civil society representatives, and academics to discuss issues of global concern.

IMF Survey: IMF Stepping Up Focus on Global Systemic Stability — October 9, 2010.