15 March 2009

IMF: legacy institution?


The G-20 said smaller economies should have more say in how the IMF is run and accelerated the next review of how power is allocated by two years to 2011. The next heads of the IMF and World Bank will also be appointed through “open, merit-based selection processes” instead of being split between a European and American, the group said.

Asian Monetary Fund?


“If China fully agrees with the idea, we can say it’s none of the U.S.’s business even if it opposes it,” he said. “We could virtually make it a fund by expanding the current Chiang Mai Initiative.”

Chiang Mai Intiative(CMI) morphing into Asian Monetary Fund?


In February 2009, ASEAN+3 agreed to make the fund worth $120 billion, up from the original level of $80 billion proposed in 2008. Final agreement was expected to come in May 2009, and 80% of the fund is expected to come from China, Japan, and South Korea.


Seems to be a break between the insolvent in Europe/USA and the surplus countries in E and SE Asia. The IMF is looking after Hungary, Iceland, Pakistan, etc. , and needs to 'borrow' an additional 500B. Meanwhile, quietly, the Chiang Mai Initiative has morphed into the Asian Monetary Fund but they don't want to call it that as it's not convenient at this time.

ASEAN+3... looks like China with its huge reserves is solidifying its hold as the regional hegemon while the West in dazed and confused. If the CMI aids weaklings Indonesia and the Philippines outside of IMF purview then the transition is nearly complete, an Asian currency block could be arranged in a short time if it's not already done.

Invoicing for oil, bulk shipping, even RMB denominated bonds ... would by-pass the European and American money changers. And in the context of what has happened over the past few years, invoicing for oil in Euros, RMBs, YEN, -- in contravention of IMF rules.... then the IMF looks rather feeble going forward as there well be no need for unbacked SDRs

Note that the threat of 'blacklisting' tax havens such as Swiss/Luxembourg has omitted mention of Dubai, HK, Singapore...

China holding a strong hand, could get more interesting when the 'value' or 'absolute confidence' of US Treasuries ... takes a hit.

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