The recent meeting of G20 Finance Ministers has actually achieved something worthy and tangible. In a bid to avoid a looming trade and currency war between the surplus and the deficit nations, the G20 Finance Ministers have agreed to rebalance the voting rights at the IMF. This may sound a bit arcane, but it does have a tangible impact. If globalisation is to continue as it has in the recent past, if we are to avoid a retreat into economic nationalism, then the global economy has to be rebalanced, which includes reform of the institutions, such as the IMF, that direct the global economy.
The detail of the reforms is interesting. 6% of the voting rights will be passed from European nations and given to the emerging economies. This reflects the change in global economic power. However, the US still retains 17% of voting rights, thus giving it a de facto veto over all decisions (an 85% majority is needed for decision-making). I wonder how long that will last? I guess that the loss of the US veto would suggest that the Dollar would no longer be the global reserve currency. I can see that coming, but not just yet.
© The European Futures Observatory 2010