Now that Dominique Strauss‐Kahn has resigned as head of the International Monetary Fund, the debate has turned to who will lead the lending agency as it goes through its usual non‐transparent and politicized selection process. (Of course, virtually all decisions at the IMF are politicized since it is primarily a political institution, a club in which rich countries’ governments with diverse interests and political priorities typically lend money to governments with track records of mismanaging their economies.)
The IMF is a fundamentally flawed institution, a problem independent of whether the new Fund chief is French or South African. Here’s a brief reading list for anybody more interested in the scandal of IMF lending than of the scandals of IMF personalities.
- In this Cato Handbook essay I provide an overview of the IMF’s poor record at promoting growth or reform, and of the moral hazard of providing big bailouts to countries, beginning with Mexico in 1995.
- In “The IMF’s Imprudent Role as Lender of Last Resort,” Charles Calomiris describes how IMF rescue packages undermine global financial stability.
- In this Cato study, I review the evolution of the IMF, show that its lending tends to last for decades rather than be short term, and that it tends to slow rather than accelerate reforms. I argue for market solutions to debt crises.
- In “International Financial Crises: Myths and Realities,” Anna Schwartz explains that financial contagion during the Asian financial crisis—a key justification for IMF intervention—was not occurring. Only countries with flawed economic policies suffered crises.
- Here, Swami Aiyar argues that the IMF has no business lending to Greece.
- In “Asian Problems and the IMF,” Allan Meltzer criticizes the Fund’s subsidization of risk.
- Here Anna Schwartz takes on the Fund’s “dubious proposal” to turn itself into a sort of bankruptcy court for nations.
- In this study Swami Aiyar takes on another bad idea: creating an IMF currency to rival the dollar.