TEXT OF STORY
Bill Radke: The governor of the Bank of England is calling for a huge change to the global financial governance system. Marketplace’s Christopher Werth reports the bank governor wants to overhaul the International Monetary Fund to correct a global trade imbalance that fueled the financial crisis and still exists today.
Christopher Werth: Mervyn King has called for effectively merging the IMF and the G20. This would create a governing council that could encourage countries with high-savings rates, like China, to spend more at home, and take pressure off the U.S. and Europe to do all the spending.
The key issue is China’s currency, which many think is undervalued, allowing it to become the exporter to the rest of the world. King says that if this problem isn’t addressed, it will only be a few years before the world slips into another economic crisis.
But Andrew Hilton of the CSFI think tank says these problems can’t be addressed by simply creating bigger institutions.
Andrew Hilton: And if you merge the G20 with the IMF, the institution which is already too big to be responsive becomes that much more unresponsive.
He says the only way to fix these problems is through more bilateral deals. The IMF will review the way power is allocated among donor countries next year.
In London, I’m Christopher Werth for Marketplace.
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