Brussels, 25/10/2010 (Agence Europe) - Meeting in Gyeongju (South Korea) this weekend, G20 finance ministers and central bankers agreed on changes to the International Monetary Fund (IMF) governance system. By 2012, there will be a 6% shift in quota shares to the world's emerging and/or under-represented economies. The quota shares match the financial contributions to the IMF and are used to decide on member countries' voting rights. The famous BRIC group (Brazil, Russia, India and China) are all in the top ten biggest IMF shareholders, with China in third place after the United States and Japan. Europeans have agreed to give up two seats on the IMF's Executive Board to emerging and/or under-represented economies. The Executive Board will continue to have 24 seats, despite the United States' desire for this to be cut back to 20. The Europeans were unable to stop the United States having the power to veto decisions. With 17.5% of the votes, the US can still veto any decision that has to be taken with at least 85% of the vote. All members of the IMF's Executive Board will be elected from now on.
In the currency spat amongst the world's big economies (see EUROPE 10233), the G 20 Finance says it wants to take coordinated action to avoid unilateral measures that would be damaging to other partners. It says that we “should move towards more market-determined exchange rate systems that reflect underlying economic fundamentals and refrain from competitive devaluation of currencies. Advanced economies, including those with reserve currencies (the United States, Ed.), will be vigilant against excess volatility and disorderly movements in exchange rates. Together, we will reinvigorate our efforts to promote a stable and well-functioning international monetary system and call on the IMF to deepen its work in these areas.”
The world's chief money men decided to fully implement in line with the planned timeline the measures known as 'Basel III' that will increase the quantity and quality of bank capital requirements as recommended by the Basel Committee (see EUROPE 10213). The legislative process to introduce the new rules in the EU will start in the first quarter of 2011. (M.B. trans fl)