Does Europe now have its own IMF?
Many observers of the new Greek bailout are noting that the primary vehicle for the rescue– the European Financial Stability Facility (EFSF)–is beginning to look an awful lot like Europe’s own version of the International Monetary Fund. French president Nicolas Sarkozy has long advocated such a mechanism and is celebrating what he described as the ...
Many observers of the new Greek bailout are noting that the primary vehicle for the rescue-- the European Financial Stability Facility (EFSF)--is beginning to look an awful lot like Europe's own version of the International Monetary Fund. French president Nicolas Sarkozy has long advocated such a mechanism and is celebrating what he described as the "beginnings of a European Monetary Fund." Spiegel notes that even skeptical Germany is now open to the comparison:
Many observers of the new Greek bailout are noting that the primary vehicle for the rescue– the European Financial Stability Facility (EFSF)–is beginning to look an awful lot like Europe’s own version of the International Monetary Fund. French president Nicolas Sarkozy has long advocated such a mechanism and is celebrating what he described as the "beginnings of a European Monetary Fund." Spiegel notes that even skeptical Germany is now open to the comparison:
The moves do indeed mean that the EFSF increasingly resembles the Washington-based IMF. It will now be allowed to grant pre-emptive lines of credit to countries under pressure on the financial markets. It will also be allowed to assist in the recapitalization of stricken banks. Even Merkel, who had long been opposed to the idea of a European Monetary Fund, allowed that "one could draw such a comparison" to the IMF.
Regional financial crises have produced similar responses in the past. Japan pushed for an Asian Monetary Fund during the financial crisis of the late 1990s, but Washington was cool to the idea and it never moved forward. Europe’s experiment will be important not only for the IMF but also for the variety of regional organizations that look to the EU as a model.
David Bosco is a professor at Indiana University’s Hamilton Lugar School of Global and International Studies. He is the author of The Poseidon Project: The Struggle to Govern the World’s Oceans. Twitter: @multilateralist
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