WASHINGTON: The International Monetary Fund could be based in Beijing in a decade if growth trends for China and other big emerging markets continue and these are reflected in the fund’s voting structure, IMF Managing Director Christine Lagarde said on Monday.
Lagarde said at a Center for Global Development event in Washington that such a move was “a possibility” because the fund will need to increase the representation of major emerging markets as their economies grow larger and more influential.
“Which might very well mean, that if we have this conversation in 10 years’ time…we might not be sitting in Washington, D.C. We’ll do it in our Beijing head office,” Lagarde said.
She added that the IMF’s bylaws call for the institution’s head office to be located in the largest member economy.
Since the IMF was launched in 1945, that has always been the United States, which currently has an effective veto over IMF decisions with a 16.5 per cent share of its board votes.
But economists estimate that China, with growth rates forecast above 6 per cent, will likely overtake US gross domestic product sometime over the next decade to become the world’s largest economy in nominal terms. Some, including the IMF, have argued that China already contributes more to global growth on a purchasing power parity basis, which adjusts for differences in prices.
The IMF last revised its quota system, or voting structure in 2010, but is set to launch another review next year.