Making the IMF Pro-Active for a Evolving World Economic Order

Abstract

The need for a pro-active more focused and more effective global mechanism to identify, control and mitigate the impact of economic and financial crisis has increasingly been felt over the last two decades. It got reinforced by not so effective IMF in terms of crisis control and mitigation as well as the occurrence and reoccurrence of several financial crises during the last few decades. Japan’s proposal to create Asian Monetary Fund (AMF), as an alternative to International Monetary Fund (IMF) in the midst of Asian Financial Crisis 1997, could be argued as an offshoot of this need. This research paper seeks to strengthen the role of IMF as a crisis control and mitigation institution and is based on two premises the effectiveness of an international institution such as the IMF is crucially dependent on the support provided by its stakeholders (such support has not been adequately leveraged in the case of the IMF) and their active participation in institutional mechanisms for averting crises, and regional trade associations could support the IMF in averting such crisis situation. The paper proposes facilitating such support through regional trade blocks, an important facilitator of regional growth, and elaborates on a mechanism in this regard involving a proposed Centre for Financial Crisis Management (CFM) under the IMF, and therefore could be known as IMF CFM.