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IMF at the Crossroads

WASHINGTON, DC: I have no personal opinion on the virtues of Caio Koch-Weiser, Germany's candidate to head the International Monetary Fund. But dithering over Michel Camdessus's replacement ought to stop. Stanley Fischer, a brilliant, experienced economist will lead the Fund very well in the interim. But the acting head of an organization has no mandate for change. So Fischer, while able, is not enabled.

That is a shame, for a constellation of factors now places the IMF at a crossroads where creative leadership is needed. Numerous suggestions for changes in its mission and modus operandi are in the air, not least the proposals of US Treasury Secretary Lawrence Summers. (America's Treasury is known to throw its weight around!)

Leadership change also creates a natural moment for organizations to take stock and ask basic questions. Institutional inertia, always a powerful force at the Fund, is now at a cyclical low. Moreover, the IMF is not currently consumed with putting out international financial fires. It has the time to consider long-term issues. And what are those issues? Here is my list:

1. To the rescue. How often, under what conditions, and for how long should the IMF offer financial assistance to distressed nations? This hot-button issue is the part of the Summers' proposal that receives the most attention. His answers are, basically: less often, only in emergencies or crises that pose systemic risk, and for short periods of time.