Chapter 17: Governance issues: the IMF, the role of the G7 and some related issues
Wouter Raab* INTRODUCTION: THE IMF AND THE INTERNATIONAL FINANCIAL ARCHITECTURE Of the 184 member countries of the IMF, only a handful are powerful enough to defend or represent their vital international economic interests on their own. For most others, however, membership of an intergovernmental organization is essential to ensure that their views and interests are represented in the international arena. Having representation at international meetings to defend its interests is a vital element of a country’s sovereignty. Therefore, a multilateral, rules-based organization is an indispensable cornerstone of the international monetary system. Rules and procedures, which give the same rights and obligations to every member country, provide the framework through which countries can commit to mutually binding actions and agreements. Such undertakings can on the one hand limit sovereignty of the individual member state, but on the other, by providing a multilateral framework for eﬀective international action they will also enhance the capacity of all member countries together to deal with the cross-border impact of developments in major ﬁnancial and goods markets. The IMF is the core institution in the international ﬁnancial system, primarily because of its mandate and its highly relevant actions in the ﬁelds of crisis prevention and crisis management. For my purposes, that is, discussing governance in the international ﬁnancial system, a key element of the IMF is that it provides a general framework of rules: internal rules on the governance within the institution; and external rules on how countries should conduct their policies, and on the...
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