RESEARCH PAPERS
32
WHY THE IMF AND THE
INTERNATIONAL MONETARY
SYSTEM NEED MORE THAN
COSMETIC REFORM
Yılmaz Akyüz!
SOUTH CENTRE
NOVEMBER 2010
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TABLE OF CONTENTS
I
INTRODUCTION ........................................................................................................... 5
II
IMF’S FAILURES IN FINANCIAL ANALYSIS AND EARLY WARNING ............................. 9
III
IMF SURVEILLANCE AND MEMBERS’ OBLIGATIONS ............................................... 14
III.1
The Bretton Woods System............................................................................ 14
III.2
Bilateral and multilateral surveillance.......................................................... 15
III.3
Reform of IMF surveillance and members’ obligations.............................. 17
III.3.1
Independent surveillance ........................................................................ 17
III.3.2
Exchange rate obligations ....................................................................... 18
III.3.3
Removing the asymmetry in adjustment ................................................. 20
III.3.4
Capital account obligations and surveillance ......................................... 21
THE INTERNATIONAL RESERVES SYSTEM ............................................................ 23
IV
IV.1
Instability and imbalances ............................................................................. 23
IV.2
Reserve costs.................................................................................................... 24
IV.3
Reducing reserve needs .................................................................................. 25
IV.4
Moving away from the dollar towards the SDRs......................................... 26
CRISIS INTERVENTION AND LENDING....................................................................... 30
V
V.1
Expansion and proliferation of crisis lending instruments ......................... 30
V.2
Pros and cons of crisis lending....................................................................... 31
V.3
Involving the private sector in crisis resolution ........................................... 34
VI
CONCLUSIONS ....................................................................................................... 37
REFERENCES................................................................................................................ 39
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I
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INTRODUCTION
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Why The IMF And The International Monetary System Need More Than Cosmetic Reform
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Why The IMF And The International Monetary System Need More Than Cosmetic Reform
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Why The IMF And The International Monetary System Need More Than Cosmetic Reform 11
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12
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Why The IMF And The International Monetary System Need More Than Cosmetic Reform 13
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III
IMF SURVEILLANCE AND MEMBERS’ OBLIGATIONS
III.1
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Why The IMF And The International Monetary System Need More Than Cosmetic Reform 15
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III.2 Bilateral and multilateral surveillance
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16
Research Papers!
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Why The IMF And The International Monetary System Need More Than Cosmetic Reform 17
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III.3 Reform of IMF surveillance and members’ obligations
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III.3.1 Independent surveillance
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18
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Why The IMF And The International Monetary System Need More Than Cosmetic Reform 19
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Why The IMF And The International Monetary System Need More Than Cosmetic Reform 21
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III.3.4 Capital account obligations and surveillance
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22
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Why The IMF And The International Monetary System Need More Than Cosmetic Reform 23
!
IV
!
IV.1
THE INTERNATIONAL RESERVES SYSTEM
Instability and imbalances
!
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24
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45$!&+4$1+'4&*+'(!,*+$4'1O!0O04$,Z2!45&0!#1*/&0&*+!&0!.$/*&.!*7!'+O!%*+4$+4!M&45!1$0#$%4!4*!
45$!0%*#$!*7!*:(&<'4&*+0!*7!@QV!,$,:$10!W@QV!IJKJ:XE!!!
!
!
IV.2 ! Reserve costs
!
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Why The IMF And The International Monetary System Need More Than Cosmetic Reform 25
0*,$!qHEH!41&((&*+2!$T%$$.&+<!KI!,*+450!*7!&,#*140E!!-:*34!5'(7!*7!45$0$!'1$!$'1+$.!71*,!
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!
!
IV.3 Reducing reserve needs
!
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26
Research Papers!
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IV.4 Moving away from the dollar towards the SDRs
!
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Why The IMF And The International Monetary System Need More Than Cosmetic Reform 27
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28
Research Papers!
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Why The IMF And The International Monetary System Need More Than Cosmetic Reform 29
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CRISIS INTERVENTION AND LENDING
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Why The IMF And The International Monetary System Need More Than Cosmetic Reform 33
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34
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Why The IMF And The International Monetary System Need More Than Cosmetic Reform 35
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36
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Why The IMF And The International Monetary System Need More Than Cosmetic Reform 37
!
VI
CONCLUSIONS
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38
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Why The IMF And The International Monetary System Need More Than Cosmetic Reform 39
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Why The IMF And The International Monetary System Need More Than Cosmetic Reform 41
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Why The IMF And The International Monetary System Need More Than Cosmetic Reform 43
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44
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Why The IMF And The International Monetary System Need More Than Cosmetic Reform 45
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