USA: Dominique Strauss-Kahn starts job as head of the International Monetary Fund (IMF) with promise of reform

Former French finance minister Dominique Strauss-Kahn succeeds Spaniard Rodrigo Rato at the helm of the International Monetary Fund. Frenchman Dominique Strauss-Kahn assumed the reins of the International Monetary Fund on Thursday (November 1, 2007) amid pressure to give emerging economies like China a bigger say in the global financial institution. A former French finance minister, Strauss-Kahn got the job on promises that he would pursue reforms of an institution whose makeup still reflects the global economic order following World War Two, with the United States and Europe as the dominant powers. "I'm going to go on building on what Rodrigo Rato did during the last years but going further and faster to reform the institution, because the mandate of the institution hasn't changed but the world in which the institution has to work has changed dramatically and so we have to adapt," Strauss-Kahn told reporters. "Fifty years ago financial stability was about currencies, exchange rates, and devaluations. Today financial stability still concerns these elements but is also different. For example, the crisis that we had this summer in the American market has nothing to do with exchange rates as they were sixty years ago. So the world is changing and the Fund, which has the role of providing a public good that the world needs, a form of stability -- not entire economic stability but a large part of economic stability -- its mission has to be adapted to today's world," he added. As he takes the helm from Spaniard Rodrigo Rato, one of the most intensely political issues Strauss-Kahn faces is finding agreement among the 185-member countries by a 2008 deadline on how to boost the voting power of under-represented emerging powers. His biggest challenge, analysts say, will be to persuade reluctant European countries to relinquish some voting power. With China and India driving the world's economic expansion and concern increasing about the growth prospects in the United States and Europe, developing countries are demanding a greater stake in the institution that overseas global financial stability. While the United States is holding on to its veto power over decisions in the IMF, it has said it will not seek an increase in its voting power. Countries like France and Britain are nervous that an adjustment in the IMF's votes could push their influence beneath that of China, whose rapidly growing economy is now the fourth largest in the world behind the United States, Japan and Germany. New leadership at the IMF also comes as member countries call for sharper focus by the institution on monitoring the global financial system and shifts brought on by recent market turmoil, a falling U.S. dollar, rising oil prices and global economic imbalances.

ITN Source | November 1, 2007

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