Cato Foreign Policy Briefing No. 48 August 26, 1998

Foreign Policy Briefing

Time to Terminate the ESF and the IMF

by Anna. J. Schwartz

Anna J. Schwartz is a research associate at the National Bureau of Economic Research.


Executive Summary

The International Monetary Fund and the U.S. Treasury Department's Exchange Stabilization Fund are undemocratic institutions unaccountable for their actions. Their current functions have little to do with their original missions. The ESF is used by the executive branch to circumvent Congress in the provision of foreign aid. Its foreign exchange interventions have, in any event, always been wasteful and ineffective at controlling the relative price of the U.S. dollar. The IMF has also been used to provide massive bailouts in the cases of Mexico in 1995 and of Asian countries since 1997. Defenders of the IMF as an international lender of last resort are misinformed since the IMF does not and cannot serve that purpose. Both institutions should be abolished, not reformed, because they are not needed to resolve currency crises and they preclude superior solutions.

Full Text of Foreign Policy Brief No. 48 (PDF, 12 pgs, 28 Kb)

1998 The Cato Institute
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