Emerging markets: a bigger say in IMF?
Emerging markets should join forces and push for more clout within the International Monetary Fund, says Mexico's central banker, who wants to head the IMF and is counting on support from emerging markets.
BEIJING – Mexico's central bank governor said Thursday that now is the time for emerging markets to have a greater voice within the European-dominated International Monetary Fund, after meeting Chinese officials to seek support for his bid for the top job.Skip to next paragraph
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During their discussions, the Chinese officials reiterated their position that they want a merit-based candidate, he said.
The other candidate, the favorite for the IMF's top job, is French Finance Minister Christine Lagarde, who visited China last week. Both have been courting emerging markets that have been pushing for a bigger say in the IMF to reflect their growing economic clout.
"I think it is the moment for emerging markets to join forces and to make the strong point that we do not agree with the way the fund is being run," Carstens said, adding that emerging markets are underrepresented in terms of participation in and management of the fund.
Despite his emphasis on emerging markets, he said the most pressing issue confronting the IMF at the moment is the crisis in Europe. He also said the IMF should take decisions relating to Greece's massive debt with the potential consequences on the whole eurozone in mind.
Countries including China, India and Brazil have called for scrapping a tradition under which the IMF's top post has been filled by a European since it was founded following World War II. Still, none of those countries has so far come out in support of Carstens, who has served as executive director and deputy managing director of the IMF.
Andy Xie, an independent economist based in Shanghai, said China would like to see a leader from theemerging markets as these countries "have their own problems ... but this doesn't change anything as the U.S. and Europe have over 50 percent of the (voting) share."
"The Chinese are realists," he said, adding that the contest was "a show" and there was no doubt that Lagarde would win. "For public appearance they (the candidates) need to seek some support from emergingeconomies. But the final outcome — there's no doubt."
The United States has so far been neutral in the race, but it has never broken from Europe in who should lead the IMF. In return, Europe has always supported a U.S. candidate to head the IMF's sister organization, the World Bank.
Carstens has the support of 12 Latin American countries, but lacks those with the most voting power — Argentina and Brazil.
The IMF's 24-member executive board will elect a leader June 30. The organization lends money to countries to help resolve balance of payments problems and has played a key role in trying to solve debt crises in Europe.
The top position became vacant after Dominique Strauss-Kahn resigned last month following his arrest on sexual assault charges, allegations that he denies.