Waterloo, Canada – June 28, 2012 – Past failures in addressing global economic imbalances suggest the International Monetary Fund (IMF) is poorly positioned to lead such efforts in the future, says CIGI’s new behind-the-scenes account of IMF activities prior to the global financial crisis.
In A Flop and a Debacle: Inside the IMF's Global Rebalancing Acts, Paul Blustein, a senior visiting fellow at The Centre for International Governance Innovation (CIGI), chronicles two major IMF initiatives in the run-up to the 2008 global financial crisis: the Fund’s 2007 decision to strengthen its surveillance of exchange rates, intended to prompt countries to act when their currencies were seriously under- or overvalued; and the multilateral consultations, in which the IMF convened representatives of five major economies to discuss plans for shrinking imbalances.
Blustein’s paper is based on interviews with scores of policy makers involved in the initiatives, and on thousands of pages of confidential documents that have never been disclosed.
“This chronicle of events explains how and why these efforts went awry; in the process, it helps illuminate the trouble besetting international coordination in general, and the weaknesses of the Fund in particular,” Blustein writes in the paper’s executive summary. “The failure of these initiatives is profoundly relevant to the efforts currently underway in the G20 to deal with imbalances.”
Blustein concludes that “for all of the IMF’s sins, there is no other institution capable of serving as umpire in the realm of international macroeconomic policy.” But he also writes: “Successful cooperation on the imbalances and currency issue will require two things the Fund currently lacks: enforcement power; and sufficient credibility and neutrality to umpire effectively.”
For more information on A Flop and a Debacle: Inside the IMF's Global Rebalancing Acts and to download a free PDF, visit http://www.cigionline.org/publications/2012/6/flop-and-debacle-inside-imfs-global-rebalancing-acts.
ABOUT THE AUTHOR:
Paul Blustein, senior visiting fellow at CIGI, is an economic journalist who covered the IMF during his career as a newspaper reporter and has written two books that focus heavily on the Fund. The first, which chronicled the emerging markets crises of the late 1990s, was The Chastening: Inside the Crisis that Rocked the Global Financial System and Humbled the IMF (PublicAffairs, 2001); the second was And the Money Kept Rolling In (And Out): Wall Street, the IMF, and the Bankrupting of Argentina (PublicAffairs, 2005). Blustein spent much of his career as a staff writer for The Washington Post, including five years as a correspondent in Tokyo, and before that he worked at The Wall Street Journal and Forbes Magazine. He lives in Kamakura, Japan, and in addition to his CIGI affiliation he is a nonresident fellow in the Global Economy and Development Program at the Brookings Institution.
Declan Kelly, Communications Specialist, CIGI
Tel: 519.885.2444, ext. 7356, Email: [email protected]
The Centre for International Governance Innovation (CIGI) is an independent, non-partisan think tank on international governance. Led by experienced practitioners and distinguished academics, CIGI supports research, forms networks, advances policy debate and generates ideas for multilateral governance improvements. Conducting an active agenda of research, events and publications, CIGI’s interdisciplinary work includes collaboration with policy, business and academic communities around the world. CIGI was founded in 2001 by Jim Balsillie, then co-CEO of Research In Motion (RIM), and collaborates with and gratefully acknowledges support from a number of strategic partners, in particular the Government of Canada and the Government of Ontario. For more information, please visit www.cigionline.org.