The International Monetary Fund’s bid for a bigger role on the world economic stage is running into mounting resistance in Germany.
Earlier this week, Dominique Strauss-Kahn, managing director, argued the economic crisis had shown that the IMF’s role needed to cover a wider range of macroeconomic and financial policies. Germany’s Bundesbank had already expressed “significant reservations” about extending the IMF’s mandate before the Istanbul meetings. Indeed, Axel Weber, Bundesbank president, said the IMF should be preparing an “exit strategy” to unwind some of the exceptional steps it has taken during the crisis.
Now a research note by Ulrich Leuchtmann, head of foreign exchange research at Frankfurt-based Commerzbank, warns that the IMF’s plans for a new financial world order would “encourage countries to rely on the IMF too heavily, rather than overcoming the crisis themselves” and that “bad economic policy would be rewarded with cheap loans”. Commerzbank does not think Strauss- Kahn has much chance of getting his way, however. “Fortunately it seems unlikely that the IMF plans will be implemented,” Leuchtmann concludes.