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Is the end of the IMF approaching?


yota691
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Is the end of the IMF approaching?

Is the end of the IMF approaching?

 30 September 2018 02:58 ص
Edit نهى النحاس

Mubasher : The name of the International Monetary Fund is often repeated in news headlines, but like firefighters and crisis managers, this presence is not reassuring.

An analysis in The Financial Times suggests that investors are becoming increasingly concerned that a currency meltdown in Turkey or Argentina could be the beginning of wider turbulence in emerging markets.

IMF Director Christine Lagarde warned in a recent interview that the escalating trade war between China and the United States, which is now occurring, could be a new shock to emerging markets.

The obvious short-term question for fearful investors, as economist Gillian Tate put it in an article, "is whether the fund has the ammunition to deal with capital flight on a larger scale."

The long-term question is to what extent can the IMF carry out its traditional role of preventing balance-of-payments imbalances and the flight of capital flows into the global financial market, which is still undergoing profound changes?

A quadripartite committee of the world's top economists published an analysis of the IMF's current situation and future prospects under the title IMF Reform: The Unfinished Agenda, which contained a strong history of changes over the past two decades in the financial markets and in the governance procedures of the IMF itself.

There was, of course, an important fact: things that had not changed during that period. "The crisis is not over and the crisis of the 21st century is still in the balance of payments and international capital flows."

Among the issues highlighted in the report with regard to the things that have changed were two things: the first is the rise of China and the second is the growth of regional arrangements for crisis management in the balance of payments.

 This comes with national self-sufficiency in the form of back-up accumulation in many countries, as well as agreements for bilateral and multilateral swap facilities between central banks as well as sovereign bailout funds established in the euro area.

China has used barter agreements as a means to enhance the role of its currency, and thus as a tool in its strategy to make the yuan a global currency.

These changes may be fatal to the traditional role of the IMF as a senior crisis management director, and this role is already under tremendous pressure with the fact that alternatives are increasing.

The reputation of the International Monetary Fund (IMF) as crisis manager has also been hit hard, either by its participation in Greece's bailout program or by its poor forecasts of a global economic recovery.

With alternative treatments for balance of payments crises and a heavy Chinese economy to be absorbed into IMF governance, it is difficult for the IMF to avoid the relative marginalization it will face.

The IMF will certainly have a permanent role but is likely to be one of a number of crisis managers, which in itself means a qualitative change in its status and impact.

Here is an urgent question, which could prevent this development? The answer may be that the IMF may be better involved with regional balance-of-payments support mechanisms as well as adopting internal IFAD reforms.

The reforms are meant to give the management of funds more independence from the political representatives of member states, which could be a step towards consolidating the views on giving China a bigger role.

Those proposals may be good, but they are probably not enough to maintain IMF sovereignty. This could only be ensured by more radical reforms such as giving the IMF the power to issue a sovereign real currency, but this is not within the current possibilities.

 The IMF should do its best, but the future has no, or at least not alone.

 
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Oh great now the IMF is in crisis. That word is getting thrown around a lot lately. :shakehead: :P

Hi Yota  :D

6 hours ago, yota691 said:

The crisis is not over and the crisis of the 21st century is still in the balance of payments and international capital flows."

 

 

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