Dear Professor Leonid Reshetnikov,
We had the pleasure to read the material you sent to Eurispes. The RISS Report “The IMF quota formula review: opportunities for BRICS and developing world” has a fundamental importance because it lays down the base for deeper discussions and initiatives around the much needed new governance of a future multi polar monetary system and around the global reform of the financial system and its jointly organized new architecture.
I share the view that the change in IMF governance is one of the most relevant international political issues on which future peaceful development and cooperation will be built.
As I also underlined in different articles, particularly at the time of any G20 summit of the past years, the USA block of the IMF quota redistribution and of the review of the quota formula was geo-politically and geo-economically motivated. Unfortunately, as a European citizen, I have to admit that, in this regard, the European Union and most of the European governments behave just as US junior partners. They miss to understand that such block is in effect damaging particularly the European aspiration of emancipation and of sovereignty.
We share with you the assessment that different methodological approaches and economic variables can be used to an increase or decrease in the number of votes of any IMF member country. And the pressure of the strongest IMF members is used to maintain a status quo.
Your review of the quota formula, both historically and scientifically, is done with great competence and it is rich in arguments and correct analyses.
I share your evaluation that the most important indicators which could provide a more just and correct result are those ones of GDP (PPP), of the level of monetary reserves, of the reverse variable of debt.
We may suggest to take in consideration for future studies other variables like the population level. It is a matter of justice to give more voice and representative decision to countries with a large number of people. Population should be considered a richness instead of a constrain.
Your paper has correctly pin pointed the financial risks represented by speculation and by the large circulation of toxic financial instruments. We are aware that it is difficult to quantify correctly such risks, but the introduction of some reverse variable related to the dimension of financial speculative instruments (like for example the over the counter (otc) derivatives) present in a country could help also in promoting necessary reforms in such highly risky economic sectors.
I share completely also you conclusions, particularly to the point related to using GDP-to-debt ratio and I emphasize the importance to work on the vulnerability indicators.
I believe that the recent participation of the Chinese renminbi in the Special Drawing Rights (sdr) represents a very far reaching breakthrough, because finally one member of the BRICS opens this door also on behalf of all the EMDC.
The recent European and worldwide banking crisis testifies that we are still far from being out of the global financial crisis. On the contrary, we must be prepare to new major earthquakes.
There are few but important economic processes which are taking place and which must be supported and promoted: the realization of continental major infrastructure projects, such as the Chinese “One Road One Belt” and the Russian and European “Trans Eurasian Development Belt “ combined with the use of national currencies to finance and to settle the economic deals among the countries involved.
Both developments will greatly contribute to the launching of a new global industrialization policy and to the preparation for a new international monetary system based on a basket of important currencies. For the BRICS countries and the EMDC such developments would help to win over the disunion tendencies, building at the same time stronger workable links.
Paolo Raimondi, economist, Eurispes expert on international economics and finance
Marco Ricceri, Eurispes general secretary