Up-and-comers get more say in global economy

Jocelyn Ford Sep 18, 2006

TEXT OF STORY

BOB MOON: The 184 countries that make up the International Monetary Fund have voted to give a greater influence to up-and-coming economies including China, South Korea, Turkey and Mexico. From Beijing, Jocelyn Ford reports it’s the biggest change for the global financial partnership in six decades.


JOCELYN FORD: You might think of this as the International Monetary Fund’s version of the Boston Tea Party. The developing countries have the world’s fastest growing economies. And they want a bigger say in how the global economy is run.

Asia Economist Glenn McGuire is with the securities house Societe Generale.

GLENN MCGUIRE: “The Winners are north Asia, the losers I would say would be traditional economies in Europe. The U.S. will always I think remain the preeminent vote.”

He says the U.S. dollar remains the reserve currency favored by foreign central banks. U.S. Treasury bonds remain a benchmark for global financial markets.

McGuire says that’s not likely to change soon. The Asian economies are likely to use their increased clout to prevent rapid changes in exchange rates that could cause them big losses.

For example, China holds about $950 billion USD in reserves. So if the dollar plummeted, it would lose a lot of wealth.

In Beijing, I’m Jocelyn Ford for Marketplace.

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