Oh George, really

Shouldn\’t you read up on these things first?

In this respect it corresponds to other global powers. Despite its trumpeted reforms, the International Monetary Fund remains under the control of the United States and the former colonial powers. All constitutional matters still require an 85% share of the vote. By an inexplicable oversight, the United States retains 16.7%, ensuring that it possesses a veto over subsequent reforms. Belgium still has eight times the votes of Bangladesh, Italy a bigger share than India, and the United Kingdom and France between them more voting power than the 49 African members.

It\’s a bank. With shareholders. The shareholders put up the capital for the bank and they get voting rights in proportion to hte amount of capital they put up. It\’s very, very, simple.

7 thoughts on “Oh George, really”

  1. Frances Coppola

    Except that it isn’t a bank, with shareholders. It is a loan fund, with members. Voting rights are proportionate to the loanable funds contributed by members.

    If Keynes had got his wish, the IMF would have been a bank. But he didn’t, and it isn’t.

  2. For a self-loathing liberal, the idea of basket case states getting to loot funds in the IMF contributed by western governments certainly has a certain frisson.

  3. Can you imagine a loan providing organisation where the debtors get as much of a say as the creditors? It wouldn’t last five minutes. Fred, Bob and George each borrow 5,000 from Moneybags, then vote three to one to cancel all existing loans without compensation.

  4. Can you imagine a loan providing organisation where the debtors get as much of a say as the creditors?

    What, like a building society?

    They work, of course, because (a) there isn’t a supermajority of lenders or borrowers, (b) the resolution you suggest should be removed by the Board as being illegal, probably under a Companies or Mutual Societies Act, and (c) the courts would strike down any resolution which passed the first two hurdles.

  5. Philip

    a) there are fewer members in the IMF than in a building society, it is thus more possible for a few members to skew decisions (more or less the same reason why you need a large statistic sample to get reliable stable results)

    b) and c) what court and what rules should abide if it is national states governing the body?

    The whole thing also reminds me a bit about pensions and public debt. A lot of the ’68 generation have kindly voted through a lot of nice things for themselves (pensions, contributions, etc) sending the bills to the younger generations…

  6. Emil: No objection to anything you say. I too wouldn’t trust such an institution at the supranational level, not least because as you say there is no law or judicial system. But I wasn’t really suggesting the IMF should be a building society: I was suggesting Matthew L was being rather too airy in his dismissal of the idea, given that it is exactly what a building society is like.

  7. Philip: I agree with you about building societies, and you’re correct that abuses are reined in by the legal system. I was talking specifically in the context of international lending to third world nations.

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