• Home
  • About us
  • Contact Us
  • Date/Time
  • Login
  • Subscribe

logo

  • Home
  • Politics
  • Economics & Finance
  • World
  • Arts & Books
  • Life
  • Science
  • Philosophy
  • Subscribe
  • Events
Home
  • Home
  • Blogs
  • Politics
  • Economics & Finance
  • World
  • Arts & Books
  • Life
  • Science
  • Philosophy
  • Subscribe
  • Events
  • Home
  • Magazine

The IMF is in crisis

Its own finances are precarious and the US and China are battling for control

by Barry Eichengreen / October 12, 2018 / Leave a comment
  • Facebook
  • Twitter
  • Linkedin
  • Email

Published in November 2018 issue of Prospect Magazine

Christine Lagarde, Managing Director of the International Monetary Fund. Photo: ABACA/ABACA/PA Images

Donald Trump’s attacks on the World Trade Organisation have left that other superintendent of the global economy, the International Monetary Fund (IMF), out of the spotlight. This may be about to change. As the Fund’s members assemble for their annual gabfest, this time in Indonesia, financial crises are brewing in Argentina, Turkey and elsewhere.

A savvy management team has done what it can to cultivate the Trump administration and fine-tune operations. After a long period when it focused on budget deficits as the source of financing problems (recall the old saw that IMF stands for “it’s mostly fiscal”), the Fund has intensified its monitoring of financial markets. It has embraced less ideological views of capital controls (not always bad) and austerity (not always good).

But now the IMF is faced with its own financial crisis. Many of its resources come from temporary loans provided by a subset of members through a pair of ad hoc agreements. One is set to expire at the end of next year, the other in 2022.

This crisis could be met by increasing its permanent resources. But these permanent contributions (“quotas” in IMF-speak) also determine voting power in the Fund, where the US has a 17 per cent share, China just 6 per cent. In any discussion of larger quotas China will insist on a greater share, and a bigger vote. But this will diminish American influence—especially because if the US share drops below 15 per cent, it loses its effective veto—and so elicits Washington’s opposition. The Fund could instead seek to extend the system of bilateral and multilateral credits. But as contributions that come…

YOU’VE HIT THE LIMIT

You have now reached your limit of 3 free articles in the last 30 days.
But don’t worry! You can get another 7 articles absolutely free, simply by entering your email address in the box below.

When you register we’ll also send you a free e-book—Writing with punch—which includes some of the finest writing from our archive of 22 years. And we’ll also send you a weekly newsletter with the best new ideas in politics and philosophy of culture, which you can of course unsubscribe from at any time







Prospect may process your personal information for our legitimate business purposes, to provide you with our newsletter, subscription offers and other relevant information.

Click to learn more about these interests and how we use your data. You will be able to object to this processing on the next page and in all our communications.

5607558365c676c101c3f47.91396052

Go to comments

Related articles

Global economic outlook: it’s not all gloom
Duncan Weldon / December 13, 2018
The biggest risks come more from politics than economics
Will no deal Brexit cause a recession? Most probably yes
Vicky Pryce / September 27, 2018
The politics around the exit process are uncertain but the economics is clearer 
Share with friends
  • Facebook
  • Twitter
  • Linkedin
  • Email

Comments

No comments yet

Prospect's free newsletter

The big ideas that are shaping our world—straight to your inbox. PLUS a free e-book and 7 articles of your choosing on the Prospect website.

Prospect may process your personal information for our legitimate business purposes, to provide you with our newsletter, subscription offers and other relevant information. Click here to learn more about these purposes and how we use your data. You will be able to opt-out of further contact on the next page and in all our communications.

This Month's Magazine

Perspiciatis unde omnis iste natus.

Prospect is the leading magazine of ideas. Each month it is packed with the finest writing on politics, culture, economics and ideas. Subscribe today and join the debate.

Subscribe

Most Popular

  • Read
  • Commented

The invigorating strangeness of Friedrich Nietzsche

The naïve optimism of Liam Fox

Why I bet £1000 that a no-deal Brexit will trigger recession

The backstop debate goes round and round but there is no waking from this Brexit nightmare

Labour's Remainers could be a ticking time bomb for the party

Ruling out no deal is the wrong sort of red line

6 Comments

The Conservative Party has a problem—it’s no longer conservative

5 Comments

The overlooked dynamic at the heart of the Brexit “culture war”

2 Comments

Arlene Foster’s DUP still holds the balance of power in Westminster—so what’s their next move?

2 Comments

The impact of Brexit on services has not received nearly enough attention

2 Comments

About this author

Barry Eichengreen
Barry Eichengreen is a professor of economics and political science at the University of California, Berkeley. He is author of "The Populist Temptation" (OUP)
  • Follow Barry on:
  • Twitter
More by this author

More by Barry Eichengreen

Is globalisation going to unravel?
May 30, 2018
The US dollar dominates global finance—but for how much longer?
November 22, 2017
Will globalisation go into reverse?
October 11, 2016

Next Prospect events

  • Details

    Prospect Book Club—Diarmaid MacCulloch

    London, 2019-05-20

  • Details

    Prospect Book Club—Sue Prideaux

    2019-04-15

  • Details

    Prospect Book Club—Andrew Roberts

    2019-03-14

See more events

Sponsored features

  • Reforming the pension system to work for the many

  • Putting savers in the driving seat: getting the pensions dashboard right

  • To fix the housing crisis we need fresh thinking

  • Tata Steel UK: Driving innovation for the future of mobility

  • The road to zero

PrimeTime

The magazine is owned and supported by the Resolution Group, as part of its not-for-profit, public interest activities.

Follow us
  • Facebook
  • Twitter
  • Google+
  • RSS

Editorial

Editor: Tom Clark
Deputy Editor: Steve Bloomfield
Managing Editor (Arts & Books): Sameer Rahim
Head of Digital: Stephanie Boland
Deputy Digital Editor (Political Correspondent): Alex Dean
Creative Director: Mike Turner
Production Editor & Designer: Chris Tilbury
US Writer-at-Large: Sam Tanenhaus

Commercial

Commercial Director: Alex Stevenson
Head of Marketing: Paul Mortimer
Marketing and Circulations Executive: James Hawkins
Programme Coordinator: Oliver James Ward
Head of Advertising Sales: Adam Kinlan 020 3372 2934
Senior Account Manager: Dominic Slonecki 0203 372 2972

  • Home
  • Advertising
  • Contact Us
  • Privacy Policy
  • Terms and Conditions
  • Acceptable Use Policy
© Prospect Publishing Limited
×
Login
Login with your subscriber account:
You need a valid subscription to login.
I am
Remember Me


Forgotten password?

Or enter with social networking:
Login to post comments using social media accounts.
  • With Twitter
  • Connect
  • With Google +
×
Register Now

Register today and access any 7 articles on the Prospect’s website for FREE in the next 30 days..
PLUS find out about the big ideas that will shape our world—with Prospect’s FREE newsletter sent to your inbox. We'll even send you our e-book—Writing with punch—with some of the finest writing from the Prospect archive, at no extra cost!

Not Now, Thanks

Prospect may process your personal information for our legitimate business purposes, to provide you with our newsletter, subscription offers and other relevant information.

Click to learn more about these interests and how we use your data. You will be able to object to this processing on the next page and in all our communications.

×
You’ve got full access!

It looks like you are a Prospect subscriber.

Prospect subscribers have full access to all the great content on our website, including our entire archive.

If you do not know your login details, simply close this pop-up and click 'Login' on the black bar at the top of the screen, then click 'Forgotten password?', enter your email address and press 'Submit'. Your password will then be emailed to you.

Thank you for your support of Prospect and we hope that you enjoy everything the site has to offer.

This site uses cookies to improve the user experience. By using this site, you agree that we can set and use these cookies. For more details on the cookies we use and how to manage them, see our Privacy and Cookie Policy.