The role of the International Monetary Fund (IMF) in international financial affairs has reemerged in the wake of the recent financial crisis. The world is looking for a strong, legitimate international financial institution to help coordinate efforts among major global economic players, to offer support to countries in crisis, and to provide an impartial voice in assessing the need for corrective action when countries fall into financial, fiscal or foreign exchange misalignment. The scandal surrounding its previous director, Dominique Strauss-Kahn, and his subsequent resignation, has led to questioning the selection process to fill these prestigious and influential positions.
While Strauss-Kahn was replaced without much controversy by France's former Finance Minister, Christine Lagarde, as head of the IMF, many felt that the time had come for a non-European leader to reflect the change in global power and economic relevance. Her appointment was supported by India, China and Russia, but many observers cite her ability to handle the IMF's bailout of weak eurozone countries as one reason why an EU-based leader is appropriate at this time. With this said, many are watching to see if she follows up on her promises to remove nationality-based approaches to key appointments that have traditionally been made by the EU or the U.S. She added that this "should also [be] reflect[ed] in our employment policies, in our training policies, in the way in which we build teams, in the way in which we organize recruitment so that people are not clones of each other."
Many emerging economies are sitting on stockpiles of cash and have become forces of financial stability, while rich countries have become weighted down by debt. With the rise of the BRIC countries, the assumed leadership positions of the U.S. and Europe are in question. If new, less traditional countries enter the international stage of global economic and trade policy and regulations, the long-term implications could be substantial.
While investors and economists may be focused on how such
changes could affect trade and economic stability - in the short- and long-term - I am most interested in seeing how this debate may
affect the structuring and implementing of governance within global
organizations such as IMF. Given the inability of these organizations to
prevent or effectively respond to the recent collapse of the financial markets,
combined with the lack of progress towards an enforceable and effective regulatory
framework, we can ask if the current governance and organizational structure of
these organizations will be effective today or into the future as economic
Questions to consider
How will shifts in global economic power affect global governance leadership?
How will this shift affect global trade?