Is the International Monetary Fund
Past its Sell-by Date?
The international financial system has undergone profound changes since the architecture of the International Monetary Fund (IMF) was determined at Bretton Woods in 1944 and since the Fund commenced its formal operations in March 1947. A combination of the well-known effects of the passing of time, institutional inertia, mission creep, and new international monetary and financial arrangements has given rise to an increased questioning of the adequacy of the Fund as it is presently constituted to secure a tolerable degree of stability in the international financial system. The Fund appears to be becoming increasingly irrelevant, impotent, and incapable of either preventing or resolving the difficulties and uncertainties that confront us today.
These weaknesses are not new. They have been rather starkly revealed in the series of crises that have shaken the international financial system since the collapse of the Bretton Woods arrangements in the 1970s: the Mexican debt crisis of 1982, the Asian crisis of 1997, the Russian and Brazilian debt crises of the late 1998–99, the Argentinean debt crisis of 2001–02, and the 2008 credit crunch and global financial crisis, to name but a few. In each of these crises, and in the many others since the 1970s, the IMF invariably attributed the cause of the problem to the financial practices and policies of the individual economies involved; it imposed upon those authorities mandatory contractionary measures in return for its support (and it refused that support to those countries that would not conform); it found the scale of these crises increasingly large in relation to the scale of its available resources.