{ "title": "Press Release: Statement by Agustín Carstens to IMF Executive Board", "publication": "IMF News, June 21, 2011", "sourceUrl": "https://www.imf.org/en/news/articles/2015/09/14/01/49/pr11246", "canonical": "https://www.imf.org/en/news/articles/2015/09/14/01/49/pr11246", "overlayPath": "/en/news/articles/2015/09/14/01/49/pr11246/index.md", "summary": "Press Release No. 11/246", "publishDate": "2011-06-21", "sections": [ { "heading": "Overview", "content": "- Press Release No. 11/246\n- Date: June 21, 2011\n- Speaker: Mr. Agustín Carstens, candidate for the position of the Managing Director of the International Monetary Fund (IMF), addressing the IMF Executive Board.\n- Core message: The IMF remains essential but faces four \"fundamental weaknesses\" that the next Managing Director must address: Governance; Crisis Prevention (surveillance); Crisis Resolution; and Policy Coordination." }, { "heading": "Governance (First Fundamental Weakness)", "content": "- Framing:\n - The Fund’s main deliverables are policy recommendations (from surveillance and technical assistance) and lending programs tied to conditionality on macroeconomic policies.\n - Effectiveness is tied to legitimacy: the Fund must be perceived as unbiased, apolitical, evenhanded, and with balanced country voice and representation.\n- Identified governance shortfalls:\n - Reforms have been \"timid\" and risk the Fund’s effectiveness.\n- Priority areas for attention:\n - Underrepresentation of emerging market countries and developing countries:\n - Increase the number of Executive Board chairs they hold.\n - Ensure adequate and merit-based participation at all levels of staff and management.\n - Quota redistribution in favor of emerging and developing countries:\n - Voting power must appropriately take into account members’ relative economic weights.\n - Use objective criteria to underpin the formula for calculating quotas.\n - Implement periodic and automatic adjustments.\n - Address regional overrepresentation.\n - Selection of management:\n - Deliver on G-20 and IMFC consensus (at least since 2005) that the MD selection process should be transparent, fair, merit-based, and independent of nationality.\n- Role expectations for the MD:\n - Serve all membership and act as guardian of evenhandedness and cooperative nature of the institution.\n - Provide intellectual leadership and build respectful relationships for constructive collaboration.\n- Accountability note:\n - Increased representation requires increased accountability; emerging market countries must fully share responsibility for promoting broad-based prosperity." }, { "heading": "Crisis Prevention / Surveillance (Second Fundamental Weakness)", "content": "- Assessment:\n - The Fund \"failed profoundly\" in anticipating the recent financial crisis.\n - Contributing factors include insufficient surveillance resources, incomplete understanding of financial sector issues, and lack of evenhandedness (advanced economy surveillance was relatively light).\n - Surveillance is ineffective if authorities do not take it seriously.\n- Required actions to strengthen surveillance:\n 1. Strong and engaged guidance from management.\n 2. More staff dedicated to surveillance, including more financial experts.\n 3. More intense and inquisitive surveillance. The Fund should second-guess conventional wisdom and authorities.\n 4. Staff and management should take more risks in their assessments; the Executive Board should be open to this.\n 5. Resist the emerging markets bias: these economies are no longer the “weakest link”.\n 6. Rebalance financial sector focus: allocate adequate resources and improve coordination with BIS, the FSB, and IOSCO.\n- Balance to strike:\n - Be a trusted advisor and partner to authorities while avoiding becoming hostage to the membership." }, { "heading": "Crisis Resolution (Third Fundamental Weakness)", "content": "- Assessment:\n - Even with adequate surveillance, countries will encounter crises; the Fund must minimize adjustment costs.\n - Recent increases in financial resources are positive but insufficient.\n- Key requirements:\n - Adjustment of quota size: quota resources have not kept pace with global growth, the size of world financial markets, or degrees of interconnectedness.\n - Further development of lending instruments; encourage the use of preventive facilities (e.g., Flexible Credit Line (FCL) success).\n - Tailoring of Low Income Countries (LIC) facilities to heterogeneous shocks.\n - The Fund should not be the sole lender of last resort; complement lending with regional arrangements and central bank swap lines (the Fund should not coordinate these arrangements).\n- Program design priorities:\n - Balance availability and scale of IMF financing, domestic policy adjustment, and support from other stakeholders.\n - Consider implications of a country crisis for international stability: nature of the crisis and sustainability of debt are critical.\n - Rule of thumb:\n - If driven by high liquidity constraints, the Fund should lend, including in large amounts.\n - If debt position is unsustainable, Fund lending would overburden the member and postpone more effective decisions; pre-emptive restructuring agreements can help restore debt sustainability and enable Fund support.\n - Acknowledge \"gray zone\" cases: lending involves judgment calls and considerable risks; weigh costs of not supporting a member in crisis." }, { "heading": "Policy Coordination (Fourth Fundamental Weakness)", "content": "- Identified global challenges requiring coordination:\n - Persistence of global imbalances.\n - Spillover effects from major economies’ policy decisions.\n - Capital flows to emerging market economies.\n - Macro prudential measures, including reserve accumulation and capital controls.\n - Commodity price increases.\n - Financial sector reforms.\n - Fiscal sustainability in advanced economies.\n - The crisis in Europe and economic transformation in the Middle East and North Africa.\n- Role for the Fund:\n - The Fund is uniquely placed to entice cooperative solutions; international policy coordination is essential but difficult.\n - Two avenues to pursue:\n - Strong coordination with the G20 and the FSB.\n - Transform the IMFC from a \"quasi-ceremonial\" event to a more substantive policy discussion meeting, with Fund technical work as the basis.\n - Integration:\n - Going forward, the G20 political process needs to be integrated into the Fund’s governance structure.\n- Legitimacy linkage:\n - International financial institutions and national governments will be more receptive and willing to cooperate with the Fund if the institution’s legitimacy is enhanced." }, { "heading": "Conclusion and Policy Imperatives", "content": "- Core conclusion:\n - Without an effective Fund, localized crises risk spreading, causing broader suffering; the Fund can avert and resolve crises if it addresses its weaknesses.\n- Four areas to strengthen:\n - Legitimate governing structure (governance reforms, quota redistribution, transparent MD selection).\n - Substantially improved surveillance and crisis prevention capabilities (more staff, financial expertise, management guidance, and institutional willingness to challenge conventional wisdom).\n - Enhanced crisis resolution capacity (adequate quota resources, tailored lending instruments, prudent program design, use of regional arrangements and swap lines).\n - Improved policy coordination (strong G20 and FSB coordination; substantive IMFC deliberations; integration of G20 into governance).\n- Leadership requirement:\n - The Fund needs an MD who can provide strategic direction and send a signal that the institution is \"one step ahead of global developments\" to continue serving all members.\n\nSource: Press Release: Statement by Agustín Carstens to IMF Executive Board (June 21, 2011).\n\n---\n\n Content in this bundle\n\n- Pr11246apdf (PDF){rel=\"external\" type=\"application/pdf\"}\n- Pr11246cpdf (PDF){rel=\"external\" type=\"application/pdf\"}\n- Pr11246jpdf (PDF){rel=\"external\" type=\"application/pdf\"}\n- Pr11246rpdf (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\n References\n\n- Press Releases\n- Statement by Christine Lagarde to the IMF Executive Board\n- Managing Director Selection Process\n- MD Selection\n- PRESS CENTER\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2015/09/14/01/49/pr11246" } ], "bullets": [ "[Markdown version](/en/news/articles/2015/09/14/01/49/pr11246/index.md)", "[Structured JSON version](/en/news/articles/2015/09/14/01/49/pr11246/index.json)", "[Bundle manifest](/en/news/articles/2015/09/14/01/49/pr11246/bundle-manifest.json)", "Published: June 21, 2011", "Press Release No. 11/246", "Date: June 21, 2011", "Speaker: Mr. Agustín Carstens, candidate for the position of the Managing Director of the International Monetary Fund (IMF), addressing the IMF Executive Board.", "Core message: The IMF remains essential but faces four \"fundamental weaknesses\" that the next Managing Director must address: Governance; Crisis Prevention (surveillance); Crisis Resolution; and Policy Coordination.", "Framing:", "Identified governance shortfalls:", "Priority areas for attention:", "Role expectations for the MD:", "Accountability note:", "Assessment:", "Required actions to strengthen surveillance:", "Balance to strike:", "Assessment:", "Key requirements:", "Program design priorities:", "Identified global challenges requiring coordination:", "Role for the Fund:", "Legitimacy linkage:", "Core conclusion:", "Four areas to strengthen:", "Leadership requirement:", "[Pr11246apdf (PDF)](/-/media/websites/imf/imported/external/arabic/np/sec/pr/2011/pr11246apdf.pdf){rel=\"external\" type=\"application/pdf\"}", "[Pr11246cpdf (PDF)](/-/media/websites/imf/imported/external/chinese/np/sec/pr/2011/pr11246cpdf.pdf){rel=\"external\" type=\"application/pdf\"}", "[Pr11246jpdf (PDF)](/-/media/websites/imf/imported/external/japanese/np/sec/pr/2011/pr11246jpdf.pdf){rel=\"external\" type=\"application/pdf\"}", "[Pr11246rpdf (PDF)](/-/media/websites/imf/imported/external/russian/np/sec/pr/2011/pr11246rpdf.pdf){rel=\"external\" type=\"application/pdf\"}", "[Press Releases](https://www.imf.org/en/news/searchnews)", "[Statement by Christine Lagarde to the IMF Executive Board](https://www.imf.org/external/np/sec/pr/2011/pr11253.htm)", "[Managing Director Selection Process](https://www.imf.org/external/np/exr/facts/mdsp.htm)", "[MD Selection](https://www.imf.org/external/np/exr/faq/mdselection.htm)", "[PRESS CENTER](http://presscenter.imf.org/)", "[https://www.imf.org/en/home](https://www.imf.org/en/home)" ], "related": [ { "title": "Pr11246apdf", "role": "document", "sourceUrl": "https://www.imf.org/-/media/websites/imf/imported/external/arabic/np/sec/pr/2011/pr11246apdf.pdf", "binary": { "path": "/-/media/websites/imf/imported/external/arabic/np/sec/pr/2011/pr11246apdf.pdf", "mime": "application/pdf" } }, { "title": "Pr11246cpdf", "role": "document", "sourceUrl": "https://www.imf.org/-/media/websites/imf/imported/external/chinese/np/sec/pr/2011/pr11246cpdf.pdf", "binary": { "path": "/-/media/websites/imf/imported/external/chinese/np/sec/pr/2011/pr11246cpdf.pdf", "mime": "application/pdf" } }, { "title": "Pr11246jpdf", "role": "document", "sourceUrl": "https://www.imf.org/-/media/websites/imf/imported/external/japanese/np/sec/pr/2011/pr11246jpdf.pdf", "binary": { "path": "/-/media/websites/imf/imported/external/japanese/np/sec/pr/2011/pr11246jpdf.pdf", "mime": "application/pdf" } }, { "title": "Pr11246rpdf", "role": "document", "sourceUrl": "https://www.imf.org/-/media/websites/imf/imported/external/russian/np/sec/pr/2011/pr11246rpdf.pdf", "binary": { "path": "/-/media/websites/imf/imported/external/russian/np/sec/pr/2011/pr11246rpdf.pdf", "mime": "application/pdf" } } ], "alternates": { "markdown": "/en/news/articles/2015/09/14/01/49/pr11246/index.md", "json": "/en/news/articles/2015/09/14/01/49/pr11246/index.json", "bundleManifest": "/en/news/articles/2015/09/14/01/49/pr11246/bundle-manifest.json" }, "generatedAtUtc": "2026-09-26T18:40:02.780Z" }