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Britain Should Offer to Give Up its Seat on the IMF
28 March 2009
Prime Minister Gordon Brown should offer to give up Britain's single seat on the International Monetary Fund (IMF) at the London summit as part of a fundamental consolidation of European representation on the Fund.
By making this radical offer, Britain would demonstrate strong leadership on the need to reform the governance of the international financial system. It would also serve as a critical signal for immediate action by the G20 leaders to kick-start the world economy and make this summit a success.
This is one of the recommendations contained in a new report, New Ideas for the London Summit: Recommendations to the G20 Leaders.
The report is a joint partnership between Chatham House and The Atlantic Council of the United States which seeks to build transatlantic consensus on the summit agenda. Its recommendations are drawn from 20 papers by European and American specialists.
Its overall conclusion is that G20 leaders should commit to two sets of actions at the London summit - those that will have an immediate effect on stemming the global financial and economic crisis and those that will have a longer-term structural impact.
Key recommendations include:
Actions for immediate impact to deal with the crisis
First, rather than recommending one-size-fits-all fiscal stimulus packages, G20 leaders need to agree on how they will share the burden of the stimulus. Each national plan must be cast in a credible medium-term framework as well as having an immediate impact.
Second, the US and other G20 leaders need to follow the example of Japan and the EU and provide credit lines that will immediately increase IMF lending facilities to help the most vulnerable countries deal with the crisis.
Third, reject all forms of protectionism by committing to a twelve-month freeze on new protectionist measures, including those that are WTO-legal.
Actions for medium and long-term impact
Fourth, strengthen the international financial and regulatory architecture by agreeing to improve supervision and rules for all financial institutions and instruments, including credit derivatives and other structured investment vehicles. This regulation must be appropriate and correctly targeted.
Fifth, a major increase in the IMF's financing capacity is necessary, and must be accompanied by reform of the IMF's governance to increase the voting weight and representation of emerging economies.
Sixth, in order to address long-term economic imbalances, set up a 'caucus on currency misalignments' within the G20 that would include China, Japan, the euro-zone and the US, with two rotating seats for G20 countries with the largest accumulation of foreign exchange reserves.
NOTES TO EDITORS
Read New Ideas for the London Summit: Recommendations to the G20 Leaders >>
Read Executive Summary >>
EVENT
Wednesday 1 April 2009 09:30 to 11:00
The London Summit: Multiple Perspectives on the G20
Dr Youssef Boutros-Ghali, Minister of Finance, Egypt; Chairman, International Monetary and Financial Committee (IMFC)
Lord Malloch-Brown, Prime Minister's Special Envoy for the G20 London Summit
Stephen Roach, Chairman, Morgan Stanley Asia
Dr Paola Subacchi, Research Director, International Economics, Chatham House
Chair: Dr Robin Niblett, Director, Chatham House
For media enquiries, please contact Nicola Norton:
+44 (0)20 7957 5739
+44 (0)79 1775 7528
ENDS
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