ANYONE who doubts the importance of the International Monetary Fund should look at Ukraine. Every Western nation is talking about helping the Ukrainians resist Vladimir Putin. In terms of immediate cash, America has come up with $1 billion of loan guarantees, while the European Union has found €1.6 billion ($2.2 billion) of budget support. The IMF, meanwhile, is discussing lending Ukraine’s government about $15 billion. It is the only outfit capable of mobilising large sums fast. That is why, for the past 70 years, the fund has been the world’s financial firefighter. And it is why Congress’s refusal to support reforms to strengthen it is shockingly shortsighted.The reforms in question concern the IMF’s system of “quotas”. Each country’s quota determines how much it pays in, its clout in the organisation and how much it can borrow if it gets into trouble. America’s quota is the biggest, giving it veto power. But today’s system gives excessive heft to small countries in Europe and too little to emerging economies. And, at $370 billion, the total value of the quotas is modest compared with the scale of global capital flows. That is why, during the 2008-...
from The Economist: Leaders http://ift.tt/1jz54b4
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