Westminster blog

Gordon Brown’s mantra of “global solutions to global problems” is rarely followed by details of the institutional reform he envisages. He prefers to discuss why the reforms are needed, rather than highlight the power broking required to set them up.

On Monday, he made an exception. During a Q&A session he said he wanted the International Monetary Fund to be “more like an independent central bank rather than a political committee”. It is a revealing quote.

What would this reform entail? At present, power over the fund’s governing board is largely determined on a “votes for cash” basis. The balance still reflects the world as it was in 1944, with Western Europe and the US dominant. And the IMF’s £200bn resources now appears relatively small in comparison to global capital flows. (Alan Beattie has written an elegant review of all this.)

To become more like an “independent central bank”, the Brown IMF would need more money and more independence. But why would any country willing to fill the IMF coffers want to give up influence over how the money is spent?

Some countries are already worried that China and Russia will use the IMF’s weakness to offer bilateral loans to struggling states. Why would China give up the foreign policy power that comes from such a bilateral loan in favour of pledging its reserves to an “independent” IMF?

Then, of course, there is the question of who the IMF is accountable to if it is no longer a political committee.  Is it wise to give so much money to a single, democratically unaccountable institution?

As Ken Rogoff, the former IMF chief economist, tells Alan Beattie: “The IMF is a necessary part of fixing problems in emerging markets, as it has the expertise that almost no one else does. But it doesn’t, and probably shouldn’t, have the resources to do it alone.”