The International Monetary Fund and the World Bank

In November 2010, the Executive Board of the International Monetary Fund (IMF) approved far-reaching reforms suggesting the end of the power structure that had prevailed ever since this multilateral institution was conceived at the Bretton Woods conference in 1944. Speaking to the press immediately after the Board’s decision, the IMF’s then managing director, Dominique Strauss-Kahn, hailed this process as ‘a historical reform, increasing the voice and representation of emerging markets and developing countries in the IMF’.¹ In practice, this means that BRIC (Brazil, Russia, India, and China) will now be amongst the IMF’s top shareholders as a result of a shift of six percent of the total quota shares. Because 80 percent of this shift comes from advanced economies (the United States and Europe mainly), when this reform takes full effect in October 2012, there will be two fewer seats for Europe on the IMF Executive Board and two more for emerging market countries. As the reforms will have significant consequences for the power structure of other important multilateral institutions, the World Bank included, this decision is one of systemic magnitude that reflects how much the world has changed since the IMF and the World Bank were created as the institutional anchors of the post-Second World War order established by the United States and its allies in 1944. The World Bank has yet to see equally significant changes, but here emerging economies also play a larger role today than only some years ago. Currently, eight member-states of the World Bank select the Executive Director directly: the United States, Japan, Germany, France, Britain, China, Russia, and Saudi Arabia.² The first five comprise the largest shareholders. The remaining executive directors are chosen amongst member country constituencies.