There is broad support for a Bretton Woods Committee proposal to create a new ministerial council for the International Monetary Fund, with voting rules and decision-making power, senior committee members have told GlobalMarkets.
“There are many voices supporting this,” said John Phillip Lipsky (pictured), a former acting managing director of the IMF and vice-chair of the BWC, a non-profit organisation in Washington that aims to support and improve the international financial institutions.
In essence, the reform would turn the IMF’s International Monetary and Financial Committee into a decision making body. This ministerial group meets twice a year at the Annual and Spring Meetings to advise the IMF’s board of governors and consider proposals by its executive board.
At present, with the IMFC having no voting rules or decision making power, individual members “can cause problems”, Lipsky said.
William Dudley, BWC chair and former president of the Federal Reserve Bank of New York, said the IMF was not alone in facing this challenge. “This is a problem of multilateral institutions,” he said. “How do you have a way of creating some pressure for people to come to the table, to find a way to cooperate?”
A ministerial council would make the IMF better able to act decisively in difficult matters —including on climate change. “We all agree something needs to be done [about climate change],” Lipsky said. “We have summit after summit that says we’re going to do something — and nothing much happens.”
The BWC believes that the IMF’s inaction on issues like this is down to gaps in its governance, implementation and accountability — all of which need to be addressed. A new council with political punch, credibility and resources would go a long way, Lipsky argued.
In July, the IMF and World Bank Group announced a joint Bretton Woods at 80 Initiative — a consultation with a remit that includes the evolving roles of both institutions in the global economy.
The BWC hopes this is the right moment for the IMF to adopt its ministerial council proposal. “It has been supported in the past,” said Lipsky, noting that a similar proposal was made when he was the fund’s first deputy managing director in 2006-11.
But the new council would not satisfy the demand to reform members’ vote shares, which continues to cast a shadow over the IMF’s legitimacy.
Countries like China — with a quota share of just over 6%, against 16.5% for the US — have been calling for reform in their favour for years.
A ministerial council would not be a substitute for voting reform, said Dudley. But it could help create pressure and a pathway to tackle this far more intractable challeng