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PETERSON INSTITUTE FOR INTERNATIONAL ECONOMICS
The Peterson Institute for International Economics is a private nonpartisan nonprofit institution for rigorous, intellectually open, and indepth study and discussion of international economic policy.
Their website: piie.com .
Edwin M. TRUMAN
Faced with the United states unwilling to risk losing its veto in the IMF, and unwilling to allow a dysfunctional US political system to continue holding the IMF hostage but wanting to preserve the institution’s central position in the international monetary and financial system, the other members of the IMF could put in place an augmented reform and financing package without the consent, or potentially the participation, of the United states.
The objectives of this option would be to eliminate permanently the US veto in the Fund, promote governance reform, and provide the IMF with added financial resources for the future.
This option would establish a “SupraFund” separate from but linked to the current IMF with almost all its features. The SupraFund would be empowered to lend to the current IMF. The members of the SupraFund would commit themselves to all the obligations and procedures associated with the current IMF with one exception.
The exception would be that the 85% majority required for some decisions in the IMF would be reduced at least to 80%, and the decisions requiring 70% majorities might be reduced commensurately.
Reducing 85% majorities merely to 80% would imply the EU members as a group with a current voting share of 29.4% under the 2010 package would retain their effective veto. This result would be unattractive to many other members.
It would argue for a reduction of the 85% majorities to 70% majorities.