Governance reform of the Bretton Woods Institutions

This paper addresses the need for governance reform in the Bretton Woods Institutions (BWIs), namely the International Monetary Fund (IMF) and the World Bank. The report, informed by interviews with former officials, consultants, and think tank experts, provides an analysis of the challenges these i...

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Bibliographic Details
Published in:Policy File 2024
Main Author: Sienna Nordquist, Joel Christoph
Format: Report
Language:English
Subjects:
Corporate governance
Finance
Geopolitics
Reforms
Online Access:Request full text
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Summary:This paper addresses the need for governance reform in the Bretton Woods Institutions (BWIs), namely the International Monetary Fund (IMF) and the World Bank. The report, informed by interviews with former officials, consultants, and think tank experts, provides an analysis of the challenges these institutions face in a rapidly evolving geopolitical climate. The authors highlight that the most recent reforms in the BWIs, including the IMF’s General Reviews of Quotas and the World Bank’s selective capital increases, have been insufficient in adapting to significant economic and geopolitical shifts. The paper emphasizes the need for a governance reform roadmap, focusing on quota reallocation, diplomatic efforts, and a commitment to diversity and democratic principles. Key points include the stagnation in quota shares and Special Drawing Rights (SDR) allocations in the IMF, with the Fifteenth General Review of Quotas concluding in 2020 without any alterations. The anticipatedIMF outcomes of the Sixteenth and Seventeenth General Reviews of Quotas suggest a potential shift in the representation of major economies like China and India, but concerns remain about the slow pace of substantial reforms. The report examines geopolitical challenges, especially the reluctance of the United States and Japan to significantly increase China’s role and influence in the BWIs. This has led to the underrepresentation of certain regions like Southeast Asia and Africa, both in terms of quota shares and on a nominal GDP and per capita basis. The paper underscores the persistent inequalities in representation since the founding of the BWIs in 1944, with fluctuations in power generating grievances for underrepresented states.