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Overview of the International Monetary Fund (IMF)

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I. Introduction Over the last decades, especially since the start of the first global crisis of the new millennium, reforming the governance of global finance, has attracted increasing attention from analysts and policymakers involved in international financial issues. Unprecedented international financial crisis once again focused people's attention to the International Monetary Fund (here in after referred to as "IMF") on the issue of reform. In the late 2000s, the growth of the BRICS?the acronym for an association of five major emerging national economies: Brazil, Russia, India, and China?economies led them to push for a greater formal role in IMF governance. This resulted in, among other things, a rapid series of reallocations of IMF quotas and voting weights to grant them greater power in IMF lending decisions. The dominant state in the IMF, the United States, consequently, holds less IMF quotas and voting weights than before. Under such situation, people would argue that the reallocations would induce the change of decision-making in the International Monetary Fund; would something change in IMF’s process of decision-making and the decision they make? In other words, would such alternations in the IMF formal voting weights alter the degree to which the IMF’s decisions reflect the interests of the United States? ?.Background By the 1944 Bretton Woods conference laid the foundation stone to IMF (International Monetary Fund, IMF) as the core of the international monetary system, so far it has gone through around two-thirds of a century. When a country first joins the IMF, it would be assigned an initial quota. Quota subscriptions are a central component of the IMF’s financial resources. Each state member of the IMF would be assigned a quota at the beginning when they first join the IMF, which is based on its relative position under the world economy background. A member country’s quota determines its max financial commitment to the IMF as well as its voting power in the IMF. The quota shares basically determine a member country’s voting power in IMF decision. In recent years, as the representative of those emerging economies, the rise of the " BRIC" made a significant change in the financial pattern of the International monetary. On March 28th 2008, the Executive Board of the International Monetary Fund approved a recommended set of reforms for IMF quotas and voting shares and asked the Governors of the 185 member nations to vote by the end of April in the same year to approve the resolution embodying the proposed reforms. According to the Report of the Executive Board to the Board of Governors by IMF, three major changes had been approved. The most significant one among these three is that the fast-growing emerging markets countries will have a bigger say in how the IMF is operate and how it interacts with its member countries (International Monetary Fund). As the managing director of the IMF, Strauss Kahn said to a journalists, “ it is a big shift in quotas and accordingly in voting power. It’s important increase in the voice and representation of the emerging market and developing countries” (IMF Survey Magazine). The 10 largest members of the Fund now consist of the United States, Japan, the four European economies (France, Germany, Italy, and the United Kingdom) and the BRICs (Brazil, China, India and the Russian Federation). The rebalanced IMF Executive Board represents a more legitimate and democratic image. Table 1 below displays the changes in voting shares expose in the IMF Executive Board decision of March 28th, 2008. The columns report the difference between the proposed new voting shares and the pre-Singapore 2006 shares. The changes in voting shares before the pre-Singapore and posy the proposed second round are obviously. By comparing the proposed new voting share “ post second round” and “ Pre-Singapore Vote Share”, the United States’ voting share had a reduction in its share from the pre-Singapore level of 17.02 percent is thus 0.29 percentage points. Another two significant declines in the shares happened to United Kingdom and France. By calculating the difference, we can realize that the United Kingdom and France both experience declines slightly larger than half a percentage point. Compared with these three member countries whose share declined, BRIC members’ share roughly have increased (such as Brazil has a very small increase of 0.31 points; while China has an increase in its pre-Singapore share of 0.88 percentage points). As we can see, as the representative of those emerging economies, the rise of the " BRIC" do make a change in the financial pattern of the International monetary. The voting style set up basis for the IMF’s operation. IMF is one the international organizations that govern on the basis of the weighted voting power of their members (another example would be the World Bank). From the beginning when IMF first established, Uni

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