WASHINGTON:'' In a historic decision, the International Monetary Fund board on Friday, Nov 5 agreed to boost the voting power of big emerging economies and make China the third leading voice of the global lender.
"This historic agreement is the most fundamental governance overhaul in the fund's 65-year history and the biggest ever shift of influence in favor of emerging market and developing countries to recognize their growing role in the global economy," IMF Managing Director Dominique Strauss-Kahn told a news conference.
Under the deal, first clinched by finance ministers of Group of 20 leading economies in South Korea last month, 6 percent of IMF voting shares will be transferred to "dynamic" emerging market countries from industrial economies.
The move would vault China over Germany, France and Britain into third spot behind the United States and Japan. It would also lift other large emerging powers India, Brazil and Russia into the top 10 ranks of the 187-member institution.
Emerging economies have gained more clout in the IMF, but Friday's shift is by far the most significant and amounts to an overhaul of the global economic order established when the IMF was set up after World War Two.
The IMF's member countries will vote on the plan in the coming weeks, after which some legislatures will need to ratify the changes.
The approval of the reforms came before next week's G20 leaders' summit in South Korea.
Strauss-Kahn said he did not believe this week's congressional elections in the United States, where Republicans won control of the House of Representatives, would delay approval of IMF reforms in Washington.
U.S.-China tensions have flared this year over business and trade, but especially over China's undervalued currency that Washington argues gives Beijing an unfair trade advantage.
Analysts believe that unless China allows its currency to rise significantly, the Obama administration may wait to submit to Congress the IMF reform plan for approval.
Strauss-Kahn said having a bigger say in the IMF came with greater responsibility in the global economy and China recognized that.
"I think (IMF reforms) may have an influence on the behavior of the Chinese authorities. They were willing to have this position, they were willing to be better represented in the IMF, which shows they do care about multilateral institutions," he said. "I expect they will behave, or have in mind the importance of their role." - Reuters
"This historic agreement is the most fundamental governance overhaul in the fund's 65-year history and the biggest ever shift of influence in favor of emerging market and developing countries to recognize their growing role in the global economy," IMF Managing Director Dominique Strauss-Kahn told a news conference.
Under the deal, first clinched by finance ministers of Group of 20 leading economies in South Korea last month, 6 percent of IMF voting shares will be transferred to "dynamic" emerging market countries from industrial economies.
The move would vault China over Germany, France and Britain into third spot behind the United States and Japan. It would also lift other large emerging powers India, Brazil and Russia into the top 10 ranks of the 187-member institution.
Emerging economies have gained more clout in the IMF, but Friday's shift is by far the most significant and amounts to an overhaul of the global economic order established when the IMF was set up after World War Two.
The IMF's member countries will vote on the plan in the coming weeks, after which some legislatures will need to ratify the changes.
The approval of the reforms came before next week's G20 leaders' summit in South Korea.
Strauss-Kahn said he did not believe this week's congressional elections in the United States, where Republicans won control of the House of Representatives, would delay approval of IMF reforms in Washington.
U.S.-China tensions have flared this year over business and trade, but especially over China's undervalued currency that Washington argues gives Beijing an unfair trade advantage.
Analysts believe that unless China allows its currency to rise significantly, the Obama administration may wait to submit to Congress the IMF reform plan for approval.
Strauss-Kahn said having a bigger say in the IMF came with greater responsibility in the global economy and China recognized that.
"I think (IMF reforms) may have an influence on the behavior of the Chinese authorities. They were willing to have this position, they were willing to be better represented in the IMF, which shows they do care about multilateral institutions," he said. "I expect they will behave, or have in mind the importance of their role." - Reuters
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