Ron Paul Dear Colleague Warning About Europeans Wanting US to Foot Bigger IMF Bill
Ron Paul Dear Colleague Warning About Europeans Wanting US to Foot Bigger IMF Bill
(J. Bradley Jansen was Ron Paul’s legislative staffer for these issues at this time)
BEWARE EUROPEAN SUPPORT FOR IMF QUOTA INCREASE:
European Monetary Union means US picks up greater tab for bailouts
Dear Colleague,
At a recent Domestic and International Monetary Policy Subcommittee hearing, C. Randall Henning of the American University and Institute for International Economics tesitfied, “The monetary union in Europe will profoundly affect the external relations of the United States. It will pose serious challenges to the United States and international community on both policy and institutional issues, ranging from the management of exchange rates to the organization of the International Monetary Fund. To prevent these problems from undermining transatlantic relations and international cooperation, U.S. and European officials should consult proactively with the oversight of the Congress…
“Regarding the International Monetary Fund, the European member states should also yield eventually to direct representation of the euro area in the IMF. A consolidation of the quotas of the European member states into one would reduce the overall European share of IMF quotas, freeing up quota shares for other, fast-growing regions of the world, which would contribute to better balance between economic size and influence within the organization.”
Already, about one-third of IMF resources are not usable for bailouts: currencies that are not significantly traded on the international capital markets, according to a hearing before the Joint Economic Committee. If the U.S. quota remains the same, while the Europeans’ share diminishes “freeing up quota shares for other, fast-growing regions of the world” which often do not have “usable” currencies to bail out IMF recipient aid countries, then the US share of usable resources increases while the European share decreases.