Recent trade disruptions and the dollar’s dominance have led ASEAN countries to renew the call for a regional multilateral alternative to the IMF. While prior efforts failed, shifts in regional power configurations could finally enable major Asian economies to take collective action.
KUALA LUMPUR – Although the International Monetary Fund has long been the most prominent global institution for promoting financial stability, calls to create regional alternatives are growing louder. During his visit to China in late March, Malaysian Prime Minister Anwar Ibrahim revived the idea of an Asian Monetary Fund (AMF). Pointing to “the strength of the economies in China, Japan, and others,” Ibrahim argued that now was an opportune time to establish an AMF, as well as discuss “the use of our respective currencies.”
This new push for multilateral alternatives to the IMF reflects the US dollar’s dominance, coupled with recent trade disruptions caused by Western sanctions on Russia. Historically, resentment of the Fund peaks during crises, because its loans to countries in financial distress often require fiscal consolidation. The debt crisis of the 1980s, the structural adjustment programs of the 1990s, and the global financial crisis of 2008 created new economic challenges, widened social inequalities, and, in some cases, undermined countries’ sovereignty, stoking anger at the IMF and its policies.
The AMF was first proposed in 1997 by Japanese financial authorities seeking a regional alternative to the IMF in response to the Asian financial crisis. Japan would take a leading role, and the United States would be excluded from participating. But the initiative was eventually abandoned, owing to a lack of consensus. The US, fearing that an AMF – and East Asian regionalism more generally – would undermine the IMF’s (and thus its own) dominant position, staunchly opposed the Japanese proposal. Later, in 1999, Malaysian Prime Minister Mahathir Mohamad fanned the embers by claiming that the Asian financial crisis would not have occurred or been as severe had a regional monetary fund existed.
KUALA LUMPUR – Although the International Monetary Fund has long been the most prominent global institution for promoting financial stability, calls to create regional alternatives are growing louder. During his visit to China in late March, Malaysian Prime Minister Anwar Ibrahim revived the idea of an Asian Monetary Fund (AMF). Pointing to “the strength of the economies in China, Japan, and others,” Ibrahim argued that now was an opportune time to establish an AMF, as well as discuss “the use of our respective currencies.”
This new push for multilateral alternatives to the IMF reflects the US dollar’s dominance, coupled with recent trade disruptions caused by Western sanctions on Russia. Historically, resentment of the Fund peaks during crises, because its loans to countries in financial distress often require fiscal consolidation. The debt crisis of the 1980s, the structural adjustment programs of the 1990s, and the global financial crisis of 2008 created new economic challenges, widened social inequalities, and, in some cases, undermined countries’ sovereignty, stoking anger at the IMF and its policies.
The AMF was first proposed in 1997 by Japanese financial authorities seeking a regional alternative to the IMF in response to the Asian financial crisis. Japan would take a leading role, and the United States would be excluded from participating. But the initiative was eventually abandoned, owing to a lack of consensus. The US, fearing that an AMF – and East Asian regionalism more generally – would undermine the IMF’s (and thus its own) dominant position, staunchly opposed the Japanese proposal. Later, in 1999, Malaysian Prime Minister Mahathir Mohamad fanned the embers by claiming that the Asian financial crisis would not have occurred or been as severe had a regional monetary fund existed.