Asia can and should free itself from the IMF

Second comment on Barry Eichengreen “Can Asia Free Itself from the IMF?” 30/06/2009, http://www.eastasiaforum.org/2009/06/30/can-asia-free-itself-from-the-imf/

I have two additional comments. The first one is about the voting mechanism and the other on policy monitoring.

Firstly, on voting mechanism. While the majority voting mechanism is better and more efficient than consensus, it still does not have a strong feel of a close community, if it is based purely on countries’ shares of their contributions.

A better voting mechanism would be able to balance two important things. First, it recognises countries’ contributions so to be accountable. Second, it can foster a closer community feel and recognise each member country as an important constituent.

In that light, an alternative voting mechanism to the purely share based majority voting is to have a combination of this voting with a simple country member voting, as I have proposed elsewhere. That is to say, for example, to have the contribution based voting for half of the total vote and the other half to be determined by the number of member countries.

If this alternative voting mechanism is adopted, any country irrespective whether it has contributed to the funds or irrespective to its size will have a vote for half of the total vote. This will make every country more respectable and thus will be more democratic. At the same time, the contribution of any country is also valued and its interest is reflected in the voting.

Secondly, on policy monitoring. Rather than handing this role to IMF bureaucrats that have little to do with this Asian institution, why not outsourcing it to an independent research or academic institution to do it? Such an institution could organise a group of eminent people from the region with the relevant expertise to undertake that monitoring task.