The U.S. has been leading the global finance for several decades through the IMF. U.S. Congress has finally made sure that it remains so.
US Congress has finally made sure that US will continue to be a global leader. They have approved a $1.1 spending deal to make sure that. As a result, the International Monetary Fund will have a new lease of life. US has been the leader of global finance for the past seven decades and they are going to continue the same tradition. They have no plans to let go of the leadership of global finance yet. US Congress has finally made sure that it is a reality as they have been mulling over this for a while. By this measure, the IMF will get a contribution of $300 million. As you know, the IMF is doing everything to help the countries which are in distress including Greece and Ukraine. The IMF is trying everything to avert the global financial meltdown.
We have to mention the fact that President Obama has pushed hard for this to happen. He said that it is vital to US. He added at the security of the leadership of the country needs such measures to be taken. According to the legislation, developing nations like Brazil, India, and China etc. will get a bigger voting power in the IMF. Also, US will continue to enjoy the sole veto power as US enjoys 16% of the votes. In an interesting development, China now has 6% voting share, whereas it had 4% voting share beforehand. As far as these reforms are concerned, they were introduced in 2010 but it was blocked by inaction on Capitol Hill.
The U.S. has paid a price
Since Congress took so much time to do this, the U.S. is at a loss today, blames former Treasury secretary. According to him, is has resulted in China making a move. China ended up setting up alternative financial institutions that challenge the dominance of the IMF. The IMF has been dominating the financial scene since the end of World War II. If you don’t know already, China has recently founded the Asia Infrastructure and Investment Bank to counter the dominance of the IMF. This new organization is based in China. Moreover, China has sought the help of BRICS countries like Brazil, India, Russia and South Africa to form a new development bank that will end the dominance of the IMF. This bank is meant to support the BRICS countries when they need money the most. Also, this is meant to deal with the financial sanctions posed by west on the developing nations like this. If you want to know more about The Financial Sector in US, click here.
If we take a look at the history of the IMF, we can see that the U.S. has been one of the major players ever since they founded this in 1944. However, congress support for this important organization was not defined clearly. In the last few years, many members of the congress accused that IMF bailed out many big banks over the loans they couldn’t recover. However, experts say that it is important for the U.S. to back IMF as this organization has been protecting the financial interests of the country for very long. He has the opinion that IMF promotes free markets and that has to remain that way.