KAI RYSSDAL: There were some big happenings at the annual meeting of the International Monetary Fund in Singapore today. Emerging economies like China and South Korea got more voting power. Boring, you say. Economic navel-gazing? Consider for a second today's reforms could prevent or minimize the next global economic crash. Which might consist of, just as a random example, a huge sell-off in the dollar and of U.S. stocks and bonds, too. Yeah, not so boring now, huh?
Marketplace's Scott Tong reports.
SCOTT TONG: The IMF voting structure has long been tilted toward old-school European powers, like Belgium and the Netherlands. Today, though, the Fund bumped up the shares of China, South Korea, Mexico and Turkey.That buys the IMF some goodwill, particularly in Asia.
DES LACHMAN: The feelings about the IMF are still rather raw.
Former IMF economist Des Lachman remembers the Asian currency meltdown nine years ago. The Fund gave bailout loans in exchange for bitter medicine: tax hikes and budget cuts that many think made things worse.
LACHMAN: Many Asian nations associate the depth of the crisis with the way in which they were treated by the IMF in 1997.
Today the economic winds have shifted: Asian powers like China hold massive foreign reserves, and the IMF may need their help if there's a next emergency. Columbia University economist Jeffrey Sachs says: Suppose investors panic and dump the dollar and a U.S. recession looms.
JEFFREY SACHS: Those are times when you really might want some monetary cooperation not to have a crisis by running for the exits, for example.
The voting change is the IMF's effort to stay relevant in a changing world. Too late, says Davesh Kapur of the University of Pennsylvania. If there is a next crisis, he says, many countries might go to private lenders and ditch the IMF.
DAVESH KAPUR: It faces much greater competition. And it'll never be the same again.
He thinks the IMF peaked in influence in 1997 . . . right around when the Spice Girls did.
In Washignton, I'm Scott Tong for Marketplace.