Can IMF resist pressure to bend its own rules?
Letter to the editor

ID1974 / Shutterstock.com

Sir, Your editorial “eurozone should relieve the IMF” (August 2) is right on the mark in suggesting that, on the basis of its recent Greek experience, the International Monetary Fund should not be called upon to provide future large-scale lending programmes in Europe. This would especially appear to be the case now that Europe has an adequately funded European Stability Mechanism in place and now that the European Central Bank has committed itself through its Outright Monetary Transaction programme to buy unlimited amounts of short-dated sovereign bonds of the European peripheral countries subject to those countries signing up to economic adjustment programmes.

The fact that Europe now does have adequate financing to fund any future European bailout programme should allow the IMF to limit itself in Europe to its traditional role of being a catalytic lender and the provider of a seal of approval for sound macroeconomic policy management.

The question remains, however, whether, with smaller European lending programmes, the IMF will be any more successful than it has been to date in resisting European government pressure to bend the IMF’s own rules in those lending programmes. One would have thought that if the IMF could not resist such pressure when it had an unusually large amount of its own money at risk, it will be even less successful in resisting that pressure when it has relatively little of its own money at stake.

Desmond Lachman, American Enterprise Institute, Washington, DC, US

Also Visit
AEIdeas Blog The American Magazine
About the Author

 

Desmond
Lachman

What's new on AEI

AEI Election Watch 2014: What will happen and why it matters
image A nation divided by marriage
image Teaching reform
image Socialist party pushing $20 minimum wage defends $13-an-hour job listing
AEI on Facebook
Events Calendar
  • 20
    MON
  • 21
    TUE
  • 22
    WED
  • 23
    THU
  • 24
    FRI
Monday, October 20, 2014 | 2:00 p.m. – 3:30 p.m.
Warfare beneath the waves: The undersea domain in Asia

We welcome you to join us for a panel discussion of the undersea military competition occurring in Asia and what it means for the United States and its allies.

Tuesday, October 21, 2014 | 8:30 a.m. – 10:00 a.m.
AEI Election Watch 2014: What will happen and why it matters

AEI’s Election Watch is back! Please join us for two sessions of the longest-running election program in Washington, DC. 

Wednesday, October 22, 2014 | 1:00 p.m. – 2:30 p.m.
What now for the Common Core?

We welcome you to join us at AEI for a discussion of what’s next for the Common Core.

Event Registration is Closed
Thursday, October 23, 2014 | 10:00 a.m. – 11:00 a.m.
Brazil’s presidential election: Real challenges, real choices

Please join AEI for a discussion examining each candidate’s platform and prospects for victory and the impact that a possible shift toward free-market policies in Brazil might have on South America as a whole.

Event Registration is Closed
No events scheduled this day.
No events scheduled this day.
No events scheduled this day.
No events scheduled this day.