Beijing-Based IMF? Lagarde Ponders China Gaining on U.S. Economy
The International Monetary Fund’s headquarters may one day shift to Beijing from Washington, aligning with China’s growing influence in the world economy, the fund’s managing director said.
Christine Lagarde, speaking late today in London, said IMF rules require the main office be located in the country that is the biggest shareholder, which the U.S. has been since the fund was formed 70 years ago.
The IMF founding members “decided that the institution would be headquartered in the country which had the biggest share of the quota, which chipped in the biggest amount and contributed most. And that is still today the United States,” she said in response to questions at the London School of Economics.
“But the way things are going, I wouldn’t be surprised if one of these days the IMF was headquartered in Beijing for instance,” she said. “It would be the articles of the IMF that would dictate it.”
Lagarde said the IMF has a good relationship with China, the world’s second largest economy and she praised the government’s commitment to fighting corruption.
She had less kind things to say about the U.S., which remains the “outlier” among Group of 20 countries to approve an overhaul of the ownership of the 188-member organization. The plan would give emerging markets more influence and would elevate China to the third-largest member nation.
Lagarde said there is “frustration by countries like China, like Brazil, like India, with the lack of progress in reforming the IMF by adopting the quota reform that would give emerging-market economies a bigger voice, a bigger vote, a bigger share in the institution and I share that frustration immensely.”
“The credibility of the institution, its relevance in the world in conducting the mission that it was assigned 70 years ago is highly correlated with its good representation of the membership,” she said. “We cannot have a good representation of the membership when China has a teeny tiny share of quota, share of voice when it has grown to where it has grown.”