As the quest to replace Dominique Strauss-Kahn as head of the International Monetary Fund (IMF) continues, China has entered the fray, saying that the U.S. should reduce its voting share in the financial body so that emerging economies can have more of a voice in the selection process. At the same time, France has said that China voiced support for French Finance Minister Christine Lagarde, currently the front-runner among candidates to replace Strauss-Kahn.
Reuters reported that Xia Bin, who sits on the monetary policy committee of the People's Bank of China (PBOC), said that IMF reform could not progress significantly without the U.S. surrendering some of its influence on the vote for Strauss-Kahn’s successor. He was quoted saying, "It's not an issue of who will be the candidate for the IMF managing director. The problem is that the voting share of the United States is too big."
The IMF in November agreed to allow large emerging economies a greater voice; China advanced from a 3.65% position to top Germany, France, and Britain with a new position of 6.19%. However, the U.S. is still the most powerful nation at the IMF, with a voting share of 17.67% that basically gives it veto power.
The PBOC has great influence on the government's position regarding IMF issues. Xia added, "The voice of emerging-market economies should be heard, but emerging markets must realize that reform of the global monetary systems is a long process." While Xia said he would like to see a Chinese candidate lead the IMF, he felt it was unrealistic to expect such an event so soon.
An anonymous source at PBOC was quoted in the report saying that China would likely use its influence in the IMF judiciously. "China is the second-largest economy in the world and our influence is increasing. So we must not make choices randomly and any decision must be taken cautiously and responsibly," he said. He would not give his name because he was not authorized to speak on the issue.
He added, "Of course, the IMF should better reflect the voices of emerging countries. But it takes time and does not mean they will necessarily select a head from the emerging countries this time."
In fact, France's budget minister, Francois Baroin, has said on Europe 1 radio that China has said it would support Lagarde in the top spot. China's foreign ministry, however, refused to comment.