Special Issue: Fondo Monetario Internacional y derechos humanos (Update)

The latest issue of Revista Derechos en Acción (No. 18, Verano 2020-2021) focuses on "Fondo Monetario Internacional y derechos humanos." This issue is available open access here. The table of contents is here. The foreword and interviews from this special issues are now available in English here.

Special Issue: Fondo Monetario Internacional y derechos humanos

The latest issue of Revista Derechos en Acción (No. 18, Verano 2020-2021) focuses on "Fondo Monetario Internacional y derechos humanos." This issue is available open access here. The table of contents is here.

IMF: Prevention and Resolution of Sovereign Debt Crises

The International Monetary Fund has published Prevention and Resolution of Sovereign Debt Crises (2018), the first volume in the new series “Selected Legal and Institutional Papers.” Here's the abstract:

Prevention and Resolution of Sovereign Debt Crises provides a guided narrative to the IMF's policy papers on sovereign debt produced over the last 40 years. The papers are divided into chapters, tracking four historical phases: the 1980s debt crisis; the Mexican crisis and the design of policies to ensure adequate private sector involvement ('creditor bail-in'); the Argentine crisis and the search for a durable crisis resolution framework; and finally, the global financial crisis, the Eurozone crisis, and their aftermaths.

Funk: Der Internationale Währungsfonds: Status, Funktion, Legitimation

Jens Burkhard Funk has published Der Internationale Währungsfonds: Status, Funktion, Legitimation (Duncker & Humblot 2018). Here's the abstract:

Jens Burkhard Funk untersucht die Aktivitäten des Internationalen Währungsfonds im Spannungsfeld von nationalem und internationalem Recht. Aufbauend auf einer dogmatischen Diskussion der grundlegenden Rechtsbegriffe bildet die Wirkung der IWF-Konditionalität auf die Souveränität der betroffenen Krisenstaaten einen Schwerpunkt der Arbeit, beispielhaft untersucht an der griechischen Finanzkrise. Als Ansatz für eine Lösung des verschuldungspolitischen Dilemmas wird die Einführung eines Insolvenzverfahrens für überschuldete Staaten diskutiert.

Feibelman: Law in the Global Order: The IMF and Financial Regulation

Adam Feibelman (Tulane Univ. - Law) has posted Law in the Global Order: The IMF and Financial Regulation (New York University Journal of International Law and Politics, forthcoming). Here's the abstract:

It is widely accepted that the framework of international financial regulation does not rely on traditional international legal institutions or arrangements. This conventional account misapprehends the scope of international monetary law and the role of the International Monetary Fund, a treaty-based international institution. It miscasts the Fund as only a monitor of its members’ compliance with agreements forged elsewhere. In fact, although the Fund is largely known for its conditional lending function, it is a regulatory institution charged with enforcing formal obligations of its nearly universal membership, including members’ obligations with regard to their financial policies. The Fund’s primary regulatory role is to conduct bilateral surveillance of its members’ performance of these obligations and multilateral surveillance to “oversee the international monetary system in order to ensure its effective operation.” Surveillance is thus a mode of enforcement, albeit one that relies primarily on persuasion and not on coercive sanctions. By misapprehending this regulatory function, scholars and commentators have underestimated the Fund’s potential impact on its members’ domestic and international financial policies and what that impact may tell us about global governance. This Article relocates the Fund within the framework of international financial regulation and describes its "financial surveillance." It observes that Fund surveillance has significant impact on its members' financial policies and proposes that this impact is, at least in part, due to the formal legal basis of its regulatory responsibilities and its members' obligations.

van Genugten: The World Bank Group, the IMF and Human Rights

Willem van Genugten (Tilburg Univ. - Law) has published The World Bank Group, the IMF and Human Rights: A Contextualised Way Forward (Intersentia 2015). Here's the abstract:

The World Bank Group and the International Monetary Fund are under substantial pressure to accept more accountability under international human rights law. This publication sets out the standards by which these international financial institutions are bound under international human rights law as it currently stands. Human rights law is ‘living law’ and has changed over time, as have international financial institutions, despite their sometimes static approach to their own mandates. However, the World Bank Group and the International Monetary Fund are both starting to recognize more and more the relevance of human rights to the fulfilment of their respective mandates, even if they still maintain, be it to different degrees, that international human rights law is only partly applicable to them. This publication argues that this position is no longer tenable and that human rights law does in fact apply to both international financial institutions.

Helleiner: Forgotten Foundations of Bretton Woods

Eric Helleiner (Univ. of Waterloo - Political Science) has published Forgotten Foundations of Bretton Woods: International Development and the Making of the Postwar Order (Cornell Univ. Press 2014). Here's the abstract:

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Eric Helleiner's new book provides a powerful corrective to conventional accounts of the negotiations at Bretton Woods, New Hampshire, in 1944. These negotiations resulted in the creation of the International Monetary Fund and the World Bank—the key international financial institutions of the postwar global economic order. Critics of Bretton Woods have argued that its architects devoted little attention to international development issues or the concerns of poorer countries. On the basis of extensive historical research and access to new archival sources, Helleiner challenges these assumptions, providing a major reinterpretation that will interest all those concerned with the politics and history of the global economy, North-South relations, and international development.

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The Bretton Woods architects—who included many officials and analysts from poorer regions of the world—discussed innovative proposals that anticipated more contemporary debates about how to reconcile the existing liberal global economic order with the development aspirations of emerging powers such as India, China, and Brazil. Alongside the much-studied Anglo-American relationship was an overlooked but pioneering North-South dialogue. Helleiner’s unconventional history brings to light not only these forgotten foundations of the Bretton Woods system but also their subsequent neglect after World War II.

Cafaro: Democratizing The Bretton Woods Institutions: Problems and Tentative Solutions

Susanna Cafaro (Università del Salento - Law) has published Democratizing The Bretton Woods Institutions: Problems and Tentative Solutions (2013). Here's an excerpt:

Two subjects are now on the agenda: how to make the Bretton Woods institutions (i) more effective, so that they can successfully face the challenges of development gaps (World Bank) and crisis prevention and management (IMF) and (ii) more democratic and less opaque, so that all their members and stakeholders can have a voice in and be represented, be they large or small, wealthy or not. The two organizations will be examined simultaneously, because of the perfect symmetry in their governance structures, of their links (shared memberships, contextual agreements), and of the complementarity of their missions. This book will examine their governance systems and above all what I reckon is the core issue: their decision-making process. My analysis is based on the firm belief that the decision-making process affects the efficiency and also – indirectly – the outcome of the international organizations’ decisions. In other words, the governance systems are bound to influence and shape the results of the actions of the international organizations themselves.

Steil: The Battle of Bretton Woods: John Maynard Keynes, Harry Dexter White, and the Making of a New World Order

Benn Steil (Council on Foreign Relations) has published The Battle of Bretton Woods: John Maynard Keynes, Harry Dexter White, and the Making of a New World Order (Princeton Univ. Press 2013). Here's the abstract:

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When turmoil strikes world monetary and financial markets, leaders invariably call for 'a new Bretton Woods' to prevent catastrophic economic disorder and defuse political conflict. The name of the remote New Hampshire town where representatives of forty-four nations gathered in July 1944, in the midst of the century's second great war, has become shorthand for enlightened globalization. The actual story surrounding the historic Bretton Woods accords, however, is full of startling drama, intrigue, and rivalry, which are vividly brought to life in Benn Steil's epic account.

Upending the conventional wisdom that Bretton Woods was the product of an amiable Anglo-American collaboration, Steil shows that it was in reality part of a much more ambitious geopolitical agenda hatched within President Franklin D. Roosevelt's Treasury and aimed at eliminating Britain as an economic and political rival. At the heart of the drama were the antipodal characters of John Maynard Keynes, the renowned and revolutionary British economist, and Harry Dexter White, the dogged, self-made American technocrat. Bringing to bear new and striking archival evidence, Steil offers the most compelling portrait yet of the complex and controversial figure of White--the architect of the dollar's privileged place in the Bretton Woods monetary system, who also, very privately, admired Soviet economic planning and engaged in clandestine communications with Soviet intelligence officials and agents over many years.

Cafaro: Il Governo delle Organizzazioni di Bretton Woods

Susanna Cafaro (Università del Salento - Law) has published Il Governo delle Organizzazioni di Bretton Woods (G. Giappichelli Editore 2012). Here's the abstract:

Questo libro esamina il Fondo monetario internazionale e la Banca mondiale quali si presentano oggi, in base al dettato normativo e alla luce della prassi e delle dinamiche politiche più recenti, ma anche dei primi, parziali, interventi di riforma.

Il tema centrale è l’assetto di governo e soprattutto quello che appare esserne il nocciolo: il processo decisionale, di cui si tenta una valutazione in termini tanto di efficacia ed efficienza quanto di democraticità.

A seguito della crisi finanziaria globale scoppiata nel 2008, ciascuna delle due istituzioni di Bretton Woods ha convocato gruppi di saggi e commissioni di esperti. Documenti sono stati prodotti da governi e altri organismi internazionali, ONG, centri di ricerca e think tank per prospettare riforme e spunti di riflessione. La gran parte di tali suggerimenti non si è tradotta in pratica. Il cuore di questo lavoro è la sistematizzazione di spunti e proposte, il bilancio di quel che è stato fatto e di quel che ancora si potrebbe fare.

Sebbene le istituzioni di Bretton Woods siano al centro di questo studio non si potrà tuttavia non fare riferimento all’insieme degli attori che compongono il quadro della global economic governance, in quanto è in questo ambito che le due organizzazioni si collocano, in cui ricevono e rimandano input e condizionamenti. Uno specifico capitolo dedicato alla prospettiva di adesione dell’Unione europea appare in questo contesto inevitabile.

Mitchell & Hawkins: China's Currency and IMF Issues

Andrew D. Mitchell (Univ. of Melbourne - Law) & Jennifer K. Hawkins have posted China's Currency and IMF Issues (in The Renminbi’s Changing Status and the Chinese and Hong Kong Financial System(s), David Donald ed., forthcoming). Here's the abstract:

China’s currency policy is one of the most hotly debated subjects in recent international monetary history. This chapter sets out the current legal framework at the International Monetary Fund (“IMF” or “Fund”) governing its members’ exchange rate policies, and the global system of exchange rates. In doing this, the chapter notes the rationale underlying the current framework, assesses the IMF-consistency of China’s policies, and reviews proposed reforms of the framework. We conclude that it would not appear that China is in breach of its obligations under Article IV, Section 1, but that legitimate concerns have been raised over the adequacy of Section 1 with regards to members’ obligations and the Fund’s oversight role.

Rapkin & Strand: Representation in International Organizations: The IMF

David P. Rapkin (Univ. of Nebraska, Lincoln - Political Science) & Jonathan R. Strand (Univ. of Nevada, Las Vegas - Political Science) have posted Representation in International Organizations: The IMF. Here's the abstract:

What does “representation” mean when applied to international organizations? This paper examines representation as a fundamental, if often neglected, aspect of democratic governance which, if perceived by enough members to be deficient or unfair, can interfere with the other components of good governance, as well as with performance of an organization’s core tasks. Using the case of the IMF, we examine how the concept can be applied an international organization. We posit that IMF decision making comprises a two-stage process. In the first stage members are assigned a quota, which drives their respective shares of votes. Descriptive representation best fits this stage. The second stage consists of decision-making in the Fund’s Executive Board, including the formation of constituencies in the Board and the consensual mode of decision making that is employed therein. Here, some form representation construed in principal-agent terms provides the most traction. We find that subjecting the IMF to this kind of conceptual scrutiny highlights important deficiencies in its representational practices.

Zaring: International Institutional Performance in Crisis

David T. Zaring (Univ. of Pennsylvania - Wharton School) has posted International Institutional Performance in Crisis (Chicago Journal of International Law, forthcoming). Here's the abstract:

The global financial crisis was a challenge to three of the most promising, and seemingly effective, institutions of international law - the World Trade Organization, the International Monetary Fund, and the international network of regulatory agencies - and it was a challenge they failed to meet. This Article reviews the performance of these three institutions in the aftermath of the financial shocks of 2007–08 and finds that they had little to say in response. Those responses that were forthcoming were either ineffective or counterproductive, and only the IMF has emerged from the crisis with its potential burnished. The record appears to vindicate the critics of these international institutions and illustrate the primacy of politics in international crisis response. That primacy has been exemplified by the importance of the G20 in coordinating an international response to the crisis. The G20 is neither law-based nor governance-focused, but can best be characterized as a modern-day Concert of Europe, which appears to be quite unconstrained by law, and is not a regulatory network.

Chwieroth: Capital Ideas: The IMF and the Rise of Financial Liberalization

Jeffrey M. Chwieroth (LSE - International Relations) has published Capital Ideas: The IMF and the Rise of Financial Liberalization (Princeton Univ. Press 2010). Here's the abstract:

The right of governments to employ capital controls has always been the official orthodoxy of the International Monetary Fund, and the organization's formal rules providing this right have not changed significantly since the IMF was founded in 1945. But informally, among the staff inside the IMF, these controls became heresy in the 1980s and 1990s, prompting critics to accuse the IMF of indiscriminately encouraging the liberalization of controls and precipitating a wave of financial crises in emerging markets in the late 1990s. In Capital Ideas, Jeffrey Chwieroth explores the inner workings of the IMF to understand how its staff's thinking about capital controls changed so radically. In doing so, he also provides an important case study of how international organizations work and evolve.

Drawing on original survey and archival research, extensive interviews, and scholarship from economics, politics, and sociology, Chwieroth traces the evolution of the IMF's approach to capital controls from the 1940s through spring 2009 and the first stages of the subprime credit crisis. He shows that IMF staff vigorously debated the legitimacy of capital controls and that these internal debates eventually changed the organization's behavior--despite the lack of major rule changes. He also shows that the IMF exercised a significant amount of autonomy despite the influence of member states. Normative and behavioral changes in international organizations, Chwieroth concludes, are driven not just by new rules but also by the evolving makeup, beliefs, debates, and strategic agency of their staffs.

Cogan: Representation and Power in International Organization: The Operational Constitution and Its Critics

ILR's editor Jacob Katz Cogan (Univ. of Cincinnati - Law) has posted Representation and Power in International Organization: The Operational Constitution and Its Critics (American Journal of International Law, forthcoming). Here's the abstract:

There is nothing more fundamental to or characteristic of a constitutional system than the techniques it adopts and employs for the selection of its decision makers, be they executive, legislative, or judicial officials. Such techniques can be based on a variety of principles and can be codified using a number of different forms. In the international system, we have a plethora of possible representative principles – those that treat all States the same, giving them each an equal vote (the sovereign equality principle); those that treat States or groups of States differently and allocate representation on the basis of their relative wealth, military power, amount of exports and imports, or some other distinctive characteristic or interest (the differential responsibilities principle); and those that prioritize region and divvy up positions accordingly (the regionalism principle). We also have a wide array of possible forms for implementing those principles – treaties, resolutions, decisions, and understandings, among many others. In the post-War world, there evolved an operational constitution of representation in which formal and informal arrangements together were employed to reconcile the conflicting principles and interests in play. Though sometimes moderating regional tensions, the operational constitution most often rewarded power – financial, trade, political, military, or otherwise – in order to maintain effective international organization.

This operational regime is currently under stress in two distinct ways. It is being assailed on its own terms as unreflective of contemporary power dynamics. Challenges to the composition of the Security Council and pressure to reallocate voting rights in the International Monetary Fund (IMF) and World Bank are the best examples of this. The operational regime is also being criticized on a more fundamental level by those who would do away with informality and preferences altogether. We see this in the attempt to wrest away the “rights” of the United States and Europe to appoint the heads of the IMF and World Bank. These two critiques of the operational constitution are moves to create an international system that works on radically different terms from that which has existed for the past sixty years. The Article concludes by considering the future of the operational constitution in light of these challenges.

Riedel: Rechtsbeziehungen zwischen dem Internationalen Währungsfonds und der Welthandelsorganisation

Thomas Gerassimos Riedel has published Rechtsbeziehungen zwischen dem Internationalen Währungsfonds und der Welthandelsorganisation: Die Organisationen und ihre gegenseitigen Rechtsbeziehungen im Bereich des Handels und der Subventionen (Nomos 2008). Here's the abstract:

Der IWF und die WTO sind als internationale Organisationen mit ihren Rechtsordnungen Bestandteile des Völkerrechts. Im Rahmen dieser Rechtsordnungen gibt es im Bereich des Handels und der Subventionen häufig Spannungen und Normenkollisionen, da die Regelwerke beider Organisationen nicht hinreichend genug abgestimmt sind. Aus diesem Grund kommt es zu organisationsüberschneidenden Streitverfahren im Rechtssystem der WTO.

Diese Arbeit zeigt, dass eine stärkere Kooperation und Koordination zwischen IWF und WTO dabei hilft, diese Streitverfahren zu vermeiden. Nach einem Rechtsvergleich beider Organisationen untersucht das Werk die gegenseitigen Rechtsbeziehungen, begrenzt auf die Bereiche des Handels und der Subventionen. Hierbei verfolgen viele Mitgliedstaaten zahlungspolitische Ziele mit Hilfe von Handelsmaßnahmen, die Bestandteile von IWF-Programmen sind und deren rechtliche Zulässigkeit in der WTO umstritten ist. Streitverfahren innerhalb der WTO, auf die das Werk Bezug nimmt, sind daher vorprogrammiert.

Der Autor bietet Lösungen zur Behebung dieser Probleme an und leistet einen Beitrag für die zukünftige Entwicklung der Internationalen Finanz- und Wirtschaftsarchitektur.

Mattoo & Subramanian: Currency Undervaluation and Sovereign Wealth Funds: A New Role for the World Trade Organization

Aaditya Mattoo (World Bank) & Arvind Subramanian (Peterson Institute for International Economics) have posted Currency Undervaluation and Sovereign Wealth Funds: A New Role for the World Trade Organization. Here's the abstract:

Two aspects of global imbalances - undervalued exchange rates and sovereign wealth funds - require a multilateral response. For reasons of inadequate leverage and eroding legitimacy, the International Monetary Fund has not been effective in dealing with undervalued exchange rates. This paper proposes new rules in the World Trade Organization to discipline cases of significant undervaluation that are clearly attributable to government action. The rationale for WTO involvement is that there are large trade consequences of undervalued exchange rates, which act as both import tariffs and export subsidies, and that the WTO's enforcement mechanism is credible and effective. The World Trade Organization would not be involved in exchange rate management, and would not displace the International Monetary Fund. Rather, the authors suggest ways to harness the comparative advantage of the two institutions, with the International Monetary Fund providing the essential technical expertise in the World Trade Organization's enforcement process. There is a bargain to be struck between countries with sovereign wealth funds, which want secure and liberal access for their capital, and capital-importing countries, which have concerns aboutthe objectives and operations of sovereign wealth funds. The World Trade Organization is the natural place to strike this bargain. Its General Agreement on Trade in Services, already covers investments by sovereign wealth funds, and other agreements offer a precedent for designing disciplines for these funds. Placing exchange rates and sovereign wealth funds on the trade negotiating agenda may help revive the Doha Round by rekindling the interest of a wide variety of groups.

Staiger & Sykes: "Currency Manipulation" and World Trade

Robert W. Staiger (Univ. of Wisconsin, Madison - Economics) & Alan O. Sykes (Stanford Univ. - Law) have posted "Currency Manipulation" and World Trade. Here's the abstract:

Central bank intervention in foreign exchange markets may, under some conditions, stimulate exports and retard imports. In the past few years, this issue has moved to center stage because of the foreign exchange policies of China. China has regularly intervened to prevent the RMB from appreciating relative to other currencies, and over the same period has developed large global and bilateral trade surpluses. Numerous public officials and commentators argue that China has engaged in impermissible "currency manipulation," and various proposals for stiff action against China are now pending on Capitol Hill. This paper clarifies the theoretical relationship between exchange rate policy and international trade, and addresses the question of what content can be given to the concept of "currency manipulation" as a measure that may impair the commitments made in trade agreements. The analysis goes to the proper relationship between IMF obligations and WTO obligations and to the question whether trade measures can be an appropriate response to exchange rate policies. Our conclusions are at odds with much of what is currently being said in Washington. For example, it is often asserted that China's currency policies have real effects that are equivalent to an export subsidy. In fact, however, if prices are flexible the effect of exchange rate intervention parallels that of a uniform import tariff and export subsidy, which will have no real effect on trade, an implication of Lerner's symmetry theorem. With sticky prices, the real effects of exchange rate intervention and the translation of that intervention into trade-policy equivalents depend critically on how traded goods and services are priced. We show how the effects differ, according to whether exporters invoice in the local currency of the producer, in the currency of the buyer, or in a "vehicle" currency such as dollars. The real effects of China's policies are thus potentially quite complex, are not readily translated into trade-policy equivalents, and are dependent on the time frame over which they are evaluated (because prices are less "sticky" over a longer time frame). Accordingly, we are skeptical about many of the policy responses now under consideration in Washington both on economic and legal grounds.

Salomon: International Economic Governance and Human Rights Accountability

Margot E. Salomon (LSE - Law & Centre for the Study of Human Rights) has posted International Economic Governance and Human Rights Accountability. Here's the abstract:

The focus on development and poverty reduction by the World Bank and the International Monetary Fund has increased the scope, and opportunity, for these highly influential international financial institutions to consider the human rights implications of their policy-based operations. Some notable advances have been made, such as greater attention by the Bank to the links between securing human rights and economic growth. Still, the negative impact these institutions themselves may have on the exercise of basic socio-economic rights of people in borrowing countries, due to the particular policies they pursue, has not been confronted. Given the functioning of international economic governance today it is necessary to consider the human rights accountability, not just of the developing states, but of all international actors that influence the direction of their social and economic policies.

IMF: Strauss-Kahn Selected as New IMF Managing Director

As widely anticipated, Dominique Strauss-Kahn was selected today as the new Managing Director of the International Monetary Fund. The IMF press release is here; Strauss-Kahn's statement upon being selected is here. Here's the IMF news story:

Former French finance minister Dominique Strauss-Kahn was selected September 28 as the new Managing Director of the IMF. The IMF's Executive Board said it selected Strauss-Kahn, 58, by consensus to succeed Rodrigo de Rato for a five-year term beginning November 1. The IMF Board considered two candidates for the post after de Rato's June 28 announcement that he intended to leave the institution in October. Strauss-Kahn, a French national, was nominated by IMF Executive Director for Germany Klaus Stein on behalf of the European Union. Josef Tosovsky, a Czech national and former Czech prime minister and central bank governor, was nominated by Executive Director for Russia Aleksei Mozhin. The Managing Director is the chief of the IMF's operating staff and Chairman of the Executive Board. He is assisted by three Deputy Managing Directors. In a statement following the IMF announcement, Strauss-Kahn said he was "determined to pursue without delay the reforms needed for the IMF to make financial stability serve the international community, while fostering growth and employment." De Rato welcomed Strauss-Kahn's selection, noting in a statement that he had known and worked with Strauss-Kahn for many years. "I know he possesses the experience, vision, and dedication to public service needed to successfully lead the IMF at this important juncture," de Rato said. He also expressed appreciation to the Executive Board for having conducted the selection "through a transparent and competitive process." Tosovsky and Strauss-Kahn were interviewed by the IMF Board in Washington in September. In his September 20 statement to the Board, Strauss-Kahn said the IMF was at a crossroads. Its very existence as the major institution providing financial stability to the world might be at stake, and rebuilding its relevance and legitimacy would be a hard task.
Concept of security Strauss-Kahn told the IMF Board that financial stability and macroeconomic stability are closely interlinked, as they also are a key determinant of the broad concept of security. "All of this means that the IMF should retain a central role in a context that is completely different from the one which prevailed when it was created," he stated. Following his July adoption as the EU's candidate to head the IMF, Strauss-Kahn embarked on a world tour to, as he said in his statement to the IMF Board, visit as many IMF members as possible. "I tried to focus on emerging, developing, and less developed countries in order to collect information, complaints, and wishes about the future of the IMF," he told the Board. Strauss-Kahn visited countries in Africa, Asia, Latin America, and the Middle East. In a Wall Street Journal op-ed on September 6, Strauss Kahn said: "As the candidate of reform, I would aim to steer the IMF on a path to confront and surmount its major challenges: adapting the institution to a changing world while reflecting the views and needs of all members." He added he was confident that, if appointed, he would "find the necessary support to implement an ambitious reform program to ensure the enduring relevance of the IMF in a rapidly changing world economy."