But what is intriguing are the arguments that follow, which reveal what the real stakes are. Crudely speaking, the advanced economies are far more bank friendly than their “emerging” counterparts. China is actively hostile to neoclassical economics and unfettered capital markets. Efforts to make China safe for investment bankers have been rebuffed. India sailed though the global financial crisis relatively well by having capital controls and heavily regulated banks. Pretty much any country that has taken IMF medicine (such as the countries caught in the Asian crisis, like Indonesia, South Korea, and Thailand) also sees the IMF as an enforcer for major capital market firms and international banks. Japan, as a military protectorate of the US, has limited degrees of freedom. Even so, during the Asian crisis, it pushed for a bailout within the region (ie, outside the IMF) and that idea was quickly slapped down by the US.
While the US and Europe have the voted to determine who gets the nod at the IMF, consider the open hostility to Western banks in this Guardian article (hat tip RN):
….in a letter to the G20 group of the world’s largest economies Brazil’s finance minister, Guido Mantega, said: “If the Fund wants to maintain its legitimacy, its managing director must be selected after broad consultation with the member countries.”…
There are equally trenchant opinions among IMF insiders. One former senior official said: “The big danger here is if the Europeans just try to put their person in. For example, Christine Lagarde [France's finance minister]. That would be a disaster. The Europeans have their heads in the sand again and if they do it, there will be bad fallout.”
“Christine Lagarde stands for protecting big banks. I know people like what she said to Jamie Dimon [chief executive of JP Morgan Chase] at Davos but she’s the most pro-bank bailout of the lot.
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