IMF Reform Secures Backing by Wide Margin
The IMF’s Board of Governors on April 28 adopted by a large margin far-reaching reforms of the institution’s quota and voting share structure. The reforms will enhance the participation and voice of emerging market and developing countries, as well as realign members’ shares with their relative weight and role in the global economy.
“This vote shows the overwhelming level of support across the Fund’s membership for these reforms, and I thank the members for this resounding endorsement,” said IMF Managing Director Dominique Strauss-Kahn. “With a voting turnout of 97.8 percent of member countries, and with 94.6 percent of the members approving these reforms, I see this result as the beginning of the new legitimacy of the Fund.”
The reform package will increase the voting shares of more than two-thirds of the 185 member countries. It will also enhance the voice and participation of low-income countries through a tripling of basic votes—the first such increase since the Fund’s creation in 1944—and will enable each of the two Executive Directors representing African constituencies to appoint an additional Alternate Director.
The IMF announced in late April that it had completed the voluntary separations phase of its organizational restructuring begun several months ago. The results will enable the institution to achieve its principal objectives: to maximize reliance on a voluntary, rather than mandatory, separation process and to better align its staff profile with its future business needs.
As part of the restructuring, IMF Managing Director Dominique Strauss-Kahn also announced his intention to appoint Anoop Singh as Director of the Asia Pacific Department, Masood Ahmed as Director of the Middle East and Central Asia Department, and Barry Potter as Director of the Office of Internal Audit. All three economists are currently on the IMF’s staff.
Which Firms Go Global
Financial market integration has taken the form of increased cross-border capital flows, tighter links among financial markets, and a greater presence of foreign financial firms around the world. Many standard measures of financial globalization offer aggregate insights, but provide few details.
A new IMF Working Paper, “International Financial Integration Through Equity Markets: Which Firms and Which Countries Go Global?” uses a large data set to answer such questions as which country and firm characteristics help or hinder integration with global financial markets. The study finds that integration may remain limited to a small group of firms and countries.
Southeastern Europe’s Banks Need to Boost Efficiency
High intermediation costs among banks in southeastern Europe are hampering economic development in the region, an IMF study shows. For these banks, the costs of intermediation—that is, transforming deposits from one set of customers into loans for another—need to be lowered more rapidly toward industrial country levels.
Governments can help reduce financial intermediation costs by changing the business environment through institution building and by exposing banks to greater competition, the IMF says.