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Underdog candidate Carstens takes on IMF's European tradition

Mexico's central bank chief Agustín Carstens faces an uphill battle against French frontrunner Christine Lagarde, who this week is lobbying India, China, and Egypt for support.

By Staff writer / June 7, 2011

An autoworker assembles a Volkswagen car at a plant near São Paulo, Brazil, where demand is soaring. The rising clout of emerging economies has renewed calls for the International Monetary Fund to better reflect global realities.

Nacho Doce/Reuters

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Mexico city

Since launching a bid to lead the International Monetary Fund (IMF), Mexico's central bank chief, Agustín Carstens, has sparked debate about whether the fund's head should hail from an emerging nation and end more than 60 years of European dominance.

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He's certainly an underdog, but after decades of Europe dictating the policies of IMF loan recipients in the developing world, his rise as a "champion" of new economies is reviving calls for the fund to better reflect global realities.

It is not the first time that a candidate from the developing world has vied for the spot, but calls this time are resonating, especially as Europe is mired in economic crisis and Brazil, Russia, India, China, and South Africa – the so-called BRICS coalition – are rising rapidly.

"I think today there is a different spirit in the air. Emerging markets know they are an increasingly dominant force in the economy," says Ousmene Mandeng, a former economist at the IMF now with the investment management company Ashmore Investment Management Limited in London.

Governance reform at the IMF is under way, and the fund is in the process of giving countries with growing economies more voting clout. And now, after former IMF head Dominique Strauss-Kahn resigned after being arrested on attempted-rape charges in New York, many see a chance to move beyond the so-called "gentleman's agreement" that has kept a European at the fund's helm while an American leads the World Bank.

Should Europe step aside?

The BRICS issued a statement condemning Europe's traditional stranglehold on the job as outdated and called on the fund to abandon "the obsolete unwritten convention that requires that the head of the IMF be necessarily from Europe."

Mario Blejer, former central banker of Argentina, says change at the top would be symbolically important, but also make sense. "Those economies have been more consistent," he says. "Mexico is doing better than Europe."

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