Mexico City – As the turmoil swirling through global financial markets continues, there is a growing realization that global economic problems require global solutions and improved global governance. This March, amid the latest financial twists and turns, a significant achievement in this regard went largely unnoticed: an agreement by the executive board of the International Monetary Fund on a new quota formula and increases in quotas for under-represented members, particularly emerging-market and developing countries.
With that move, the IMF gave these countries a stronger voice in the main international organization charged with ensuring financial stability – and thus in the global economy itself. The decision, taken after nearly two years of highly technical and sometimes arcane negotiations, involved a set of measures that change the way quotas (which determine voting power in the IMF) are distributed.
Of course, at the end of the day, the total shift in voting power from developed to developing countries was only about 2.7%. So why is it important?
Speaking as someone who has witnessed this process as an insider (as a former member of the IMF’s executive board) and an outsider (in my current capacity as Mexico’s finance minister), I see three main points that merit attention.