4 - The Report of the International Financial Institution Advisory Commission: comments on the critics

Summary

When the US Congress approved $18 billion of additional funding for the International Monetary Fund (IMF) in November 1998, it authorised a study of international financial institutions. Congressional concerns included the growing frequency, severity and cost of financial disturbances, the fragility of the international monetary system, the ineffectiveness of development banks, and corruption in Russia, Indonesia, Africa and elsewhere. But Congress also expressed concern about whether international financial institutions (IFIs) had adapted appropriately to the many changes since the Bretton Woods Agreement in 1944.

In July 1999, Congress completed appointment of the members of the International Financial Institution Advisory Commission (usually called the Meltzer Commission). Between 9 September 1999 and 8 March 2000, the Commission met twelve times and, in addition, held three days of public hearings. On 8 March 2000, it presented its Report to the Speaker and the Majority Leader of the House of Representatives (International Advisory Commission, 2000). The Report stimulated active discussion of issues that might have been addressed at the fiftieth anniversary of the Bretton Woods Conference, in 1994, but were not.

Discussion was overdue. As the US Congress recognised, the world economy and the international financial system are very different from the world envisioned at Bretton Woods in 1944. The principal international financial institutions responded to many past changes and crises by expanding their mandate and adding new facilities and programmes. New regional institutions opened to serve the needs of regional populations.