EU concedes IMF seats in 'historic' shake-up
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Mr Strauss-Kahn called the shift 'historic' (Photo: European Commission)
Europe has conceded its overrepresentation within the structure of the International Monetary Fund (IMF), allowing emerging nations a louder voice and a real place at the table on the board of the organisation set up some 60 years ago to oversee the world's financial system.
Finance ministers at the Group of 20 nations summit in Gyeongjiu, South Korea, on Saturday (23 October) agreed to the changes, which will see a shift in five to six percent of the votes within the institution toward "dynamic, emerging economies," such as China, India and Brazil, and Europe give up two of its seats on the IMF executive board.
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IMF managing director Dominique Strauss-Kahn, describing the shift as "historic," said: "This makes for the biggest reform ever in the governance of the institution."
"The ten biggest members of the Fund ... will be those who deserve to be the biggest members," he added, going on to describe how "the membership and quota of the membership are not really representing the importance and weight of the countries in the global economy."
Under the agreement, the so-called "Brics" - Brazil, Russia, India and China - will take their place amongst the IMF's 10 largest shareholders.
How Europe will assess who is to lose their seat was not decided, but pressure will likely fall on the Netherlands and Belgium, until now the 11th and 12th most powerful members of the board in terms of voting share.
Belgian finance minister Didier Reynders, in South Korea also in his position as representative of the European Union because his country currently holds the EU's six-month rotating presidency, suggested in an interview with De Tijd, a Belgian economics daily, that the two countries, along with other mid-ranking EU economies, could share their seat.
He also suggested that parallel to changes at the IMF, similar moves could be made within the structure of the G20, with Belgium, the Netherlands and similar-sized EU states given a seat in the G20.
The Netherlands however believes it to be premature to be discussing the situation, according to a spokesman for Dutch finance minister Jan Kees de Jager.
