(PRWEB) June 17, 2011
Strauss-Kahn played a crucial role in the discussions that led to the massive European bail-outs following the debt crisis. Market players are keen to gain an insight into the thinking of Strauss-Kahn's successor given the importance of the IMF in international lending and maintaining the solvency of economies during times of crisis. This post takes a brief look at the leading candidates and their possible impact on the currency market.
The current French finance minister and by far the leading contender, Legarde is the leading European candidate for a position that has traditionally been held by a European. Other European leaders are rallying behind in support including Germany's Angela Merkel and many other officials. With Straus-Kahn's scandalous departure there are growing voices for the position to pass to a non-European candidate, but officials in Europe are resisting this on the grounds of the still-evolving debt crisis there.
It was Lagarde's performance during that crisis that has gained her such strong support. She played a key role in the emergency meetings to develop the rescue package for the Euro following Greece's debt crises. She would bring that experience to the IMF, a move certain to instill confidence in global markets. Her candidacy may also receive support from the US which wants to maintain its traditional leadership position at the World Bank and will therefore support Legarde to maintain the status quo.
Perhaps the main challenger to Lagarde is Mexican central banker Agustín Carstens, who looks to gain support from developing nations as well as non-Western powers such as India and China who want to challenge European hegemony at the international financial institution. Carstens brings broad experience to the race having previously served as Deputy Managing Director at the IMF and as Mexican Secretary of Finance.
Carstens is in fact playing on the recent crisis that Europe has faced as a reason to select a leader from the developing world. As reported by AFP, Carstens pointed out that a European-led IMF has previously acted to shore up Latin American economies and that it was perhaps time to return the favour. "Why shouldn't a Latin American be put in charge of helping resolve the economic problems of Europe?" he asked. This could imply that Carstens will support a return to market forces to allow Europe to emerge from the debt crises.
Somewhat of a wild card, Fisher is the latest challenger to throw his hat into the ring. Fisher is currently the Chairman of the Bank of Israel and a former leading official at the World Bank. He brings broad experience as an international economist and as the central banker in Israel. In that position he guided the Middle-Eastern country through the 2008-2009 financial crisis and intervened in the foreign currency market to protect Israeli exports. This may indicate a more interventionist outlook from Fisher who could position the IMF to a take an even more active role in shaping international monetary policy.
Fisher's candidacy faces certain obstacles. While experts agree that he is perhaps the most qualified for the position, certain Arab governments may object to his appointment. Additionally, at 67, his age is a factor as the IMF has rules which prevent anyone over the age of 65 being appointed as director or holding the post beyond the age of 70.
So the race is hotting up. The 24 members of the IMF's executive board are expected to make a decision by 30 June. Ideally, they come to a consensus but if they can't, a vote will take place. Many pundits believe that the job is most likely to go to a European, but some developing countries are beginning to take a stand against that idea. We'll keep you posted on any developments.
Notes to editors
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