Asia Needs to Spell Out Changes They Want in International Monetary System

The International Monetary Fund contributes to stabilizing the monetary system, reducing imbalances and providing emergency assistance as needed. Yet many Asian nations resist borrowing from the IMF and a regional arrangement for Asia has yet to be activated, writes Barry Eichengreen for Caixin. He urges critics to be specific on needed reforms: “Do they require further changes in the composition of the IMF Executive Board or in the process for selecting the managing director? Do they require specific changes in IMF policies and procedures? … better is to specify reforms that will make it acceptable for Asian countries in trouble to borrow from the IMF and for strong countries to sign up for its Precautionary Credit Line.” He points to problems with the system of exchange rates: “Countries with deficits don't want to allow their currencies to depreciate because doing so will increase the burden of servicing foreign-currency debts. Countries in surplus hesitate to allow their currencies to appreciate for fear of losing competitiveness.” Asian nations could lead by offering specific recommendations on how the IMF might prevent inappropriate interventions in foreign exchange markets that add to imbalances. – YaleGlobal