Rescuing the Rescuer
What Should a Twenty-First-Century IMF Do?
An international monetary fund … will put an end to monetary chaos.
The fund is a financial institution to preserve stability and order in the
exchange rates between different moneys … the fund agreement spells
the difference between a world caught again in the maelstrom of panic and
economic warfare culminating in war—as in the Nineteen Thirties—or a
world in which the members strive for a better life through mutual trust,
cooperation and assistance. The choice is ours.
—President Franklin Delano Roosevelt’s message to Congress, 12 February 1945
AS THE GREAT CRISIS BATTERED ECONOMIES AROUND THE world, the International Monetary Fund (IMF), only a few years ago fading into obscurity in the thriving world economy, sprung back to business. Some of the first rescues went to Ukraine, Iceland, Pakistan, Belarus, Georgia, and Latvia, followed by Serbia, Romania, Poland, and a number of Latin American nations, among others. By the fall of 2009, the IMF had committed over $160 billion in new loans and credit lines. Policy thinking on the Fund’s future shifted rapidly, as well. At US initiative, the G20 pledged to triple the Fund’s lending capacity to $750 billion, and minted it as the manager of the G20’s rebalancing initiative. Paradoxically perhaps, the crisis rescued the venerable global rescuer.
The IMF has played a critical role in postwar global economic governance and in advancing US interests. It has issued authoritative commentary on the challenges in the world economy, assiduously surveyed the state of its 186 member economies, and time and again steadied nations engulfed in economic turbulence. The Fund’s counsel, even if at times criticized as draconian, has tempered economic policy making around the world. Many