The Great Debate UK

from The Great Debate:

Is there any point to the IMF?

John Kemp Great Debate-- John Kemp is a Reuters columnist. The views expressed are his own --

Institutions often outlive their usefulness. Since the end of the Cold War, NATO has often looked like an organization in search of a mission. Lately, the International Monetary Fund (IMF) has also seemed like one lost without a contemporary role.

The IMF is trying to reinvent itself as a global financial regulator or as a forum in which member states can hold mutual discussions about their banking, monetary and fiscal policies -- a sort of World Trade Organisation (WTO) for finance.

Getting agreement to set up a major new international institution is difficult since sovereign states jealously guard their prerogatives and are reluctant to concede any authority to a supra-national body. But dismantling them when their original rationale has passed is almost as difficult:

    International institutions are so hard to set up there is a temptation not to waste the effort and keep them around to solve other, emerging problems, without having to start from scratch again. Not so much mission-creep and mission transition. Officials are good at coming up with new reasons for organizations to exist. In most cases there is no vocal constituency calling for obsolete institutions to be dismantled. Perhaps most important, institutions become a familiar and comfortable part of the international landscape, handy to keep around just in case they are ever needed again sometime in the next few decades.

Last year a number of European Bank for Reconstruction and Development (EBRD) shareholders questioned the future of the bank and asked for a review of its direction. In recent months it has reinvented itself as a crisis lender.