Rethinking the Governance of the International Monetary Fund

IMF Working Papers, December 1, 2006

Source details

Paper objective: set out the principal issues that need to be resolved in formulating a proposal for quotas and voice reform in the IMF that could command broad support.
Theoretical framework: follows John Rawls and uses his theory of justice to provide a method for understanding what should be the case, in the context of voice and voting shares, before international institutions, such as the IMF, are to be justifiable to their members.
Core argument: implementation of this process suggests that a major revision of the quota formulas is long overdue.
Risk highlighted: leaving quota formula revision unaddressed raises serious questions regarding the IMF's governance which could develop into a core mission risk and jeopardize the relevance of the institution.

Justice as foundational: "justice is the first virtue of social institutions," — this normative premise is used to evaluate voice and voting shares in the IMF.
Quota formula shortcomings:
- A major revision of the quota formulas is long overdue.
- Current formula issues imply governance concerns that may threaten the IMF’s relevance.
Contextual subjects addressed: Capital flows, Financial crises, International reserves, Labor, Market exchange rates.

Reform imperative:
- Formulate quota and voice reform proposals that can command broad support among IMF members.
- Undertake major revision of the quota formulas to address governance deficiencies and reduce core mission risk.
Procedural recommendation:
- Use Rawlsian justice-based method as a guiding framework for determining fair distribution of voice and voting shares.