The debt crisis that has hammered southern Europe since 2010 will have long-lived economic effects, despite the moderation in Spanish and Italian government borrowing costs since the European Central Bank's "Outright Monetary Transactions" initiative last September.
New IMF Managing Director Christine Lagarde has to move quickly to establish independence from the European authorities who got her the job, enhance the IMF's legitimacy, and display her ability to manage the fund, says CFR's Steven Dunaway.
European Union Commissioner for Economic and Monetary Affairs Olli Rehn says French Finance Minister Christine Lagarde "would make a very good managing director of the IMF for the whole world, not only for Europe." "The European Union and its member states see that Christine Lagarde, the finance minister of France, has very strong professional qualifications and has earned the respect of her peers as the chairperson of the G20," Rehn said.
The arrest of IMF chief Dominique Strauss-Kahn on charges of sexual assault could hamper the fund's short-term ability to help manage the eurozone crisis but is not likely to harm the IMF over the long term, says CFR's Steven Dunaway.
The nearly $1 trillion EU bailout plan appears to have achieved immediate aims of restoring confidence in markets, but concerns persist about deeper reforms needed to tackle the region's sovereign debt crisis.
In this Wall Street Journal op-ed, Sebastian Mallaby writes that persuading China to change its currency policy would be a worthy goal for a 21st-Century Bretton Woods. It will be up to the two great powers -- the U.S. and China -- to fashion a deal that brings China into the heart of the multilateral system.
The Financial Times' Martin Wolf argues that massive accumulations of currency reserves enabled housing bubbles in developed economies and sparked the current financial crisis. The shakeout, Wolf says, could take years.
The International Monetary Fund’s legitimacy and status must be strengthened now so that it can be an effective manager when the next global crisis breaks out, urges a new Council Special Report. “Economic and financial conditions can change with alarming speed, and crises are bound to recur,” warns report author and Council Senior Fellow Peter Kenen, a renowned economist. “It would be far harder to reform the Fund in the midst of a new crisis than to do so now. It is easier to modernize a fire brigade when there are few fires than in the midst of a major conflagration.”
With IMF Managing Director Rodrigo de Rato resigning in October, a new report analyzes the reform measures that will be bequeathed to Mr. de Rato's successor, and argues that the reform measures deserve the support of the United States, including the U.S. Congress when it is asked to implement some of the key measures.
The Council on Foreign Relations' David Rockefeller Studies Program—CFR's "think tank"—is home to more than seventy full-time, adjunct, and visiting scholars and practitioners (called "fellows"). Their expertise covers the world's major regions as well as the critical issues shaping today's global agenda. Download the printable CFR Experts Guide.