Germany Opposes Single Voice for Euro Countries at IMF | Business| Economy and finance news from a German perspective | DW | 16.09.2006
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Germany Opposes Single Voice for Euro Countries at IMF

German Finance Minister Peer Steinbrück ruled out suggestions that the eurozone nations should have only one seat on the board of the International Monetary Fund.


At the annual IMF meeting in Singapore, Germany worked to retain its clout on the lending body's board

Steinbrück, who is attending the annual meetings of the IMF and the World Bank in Singapore, said that as the world's third largest economy after the US and Japan, Germany must keep its influence in the IMF amid wide-ranging reform of the institution..

In a sign of tough battles ahead on IMF reform -- a key issue at the Singapore meetings -- the German finance chief said he opposed US suggestions that the size of nations' Gross Domestic Product should be given a predominant role as part of the planned overhaul of

IMF members' votes.

Instead, the reform blueprint should look for a "fair formula" which also looks at the openness of countries' economies, he said.

Two-step reform process

The IMF is currently looking at ways to give emerging economies such as China a louder voice in the running of the 184-member international lending agency.

Peer Steinbrück in Singapur

Peer Steinbrück shakes hands with Singapore's Prime Minister Lee Hsien Loong ahead of the IMF meeting

Europeans are backing IMF proposals for a two-step reform process, with four countries -- China, South Korea, Mexico and Turkey -- receiving an immediate ad-hoc increase in their voting power.

But many of the 12 eurozone nations are wary of the second-stage reform, to be decided over the next two years and aimed at crafting a new formula allowing for further adjustments in the voting power of more countries.

Protecting Europe's clout

The US has suggested allocating voting shares based largely on a country's GDP. But many European Union countries fear that this will force them to give up some of their eight seats on the 24-strong IMF executive board, leading to a loss of Europe's global clout.

There is less unity within the EU, however, on the suggestions that the 12-nation eurozone should have only one seat on the IMF board.

Support for single vote

British Chancellor of the Exchequer Gordon Brown, who heads the IMF's powerful monetary and financial committee, has hinted at such a possibility. Britain is not a member of the euro.

The proposal also has the backing of Euro-group chairman Jean-Claude Juncker who said in Helsinki last week that he wanted the euro area to be represented at international meetings by "a single representative."

But Steinbrueck insisted in Singapore that Germany, the largest eurozone member, was opposed to any reduction of the eurozone vote to one seat.

European Central Bank President Jean-Claude Trichet has also said he fully supports "a single representative of the euro area" in international bodies.

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