This week the International Monetary Fund host their annual Spring Meetings in Washington DC amidst rising uncertainty over the future relationship between Britain and the EU. Ahead of the gathering, general manager of the Bank for International Settlements, Agustin Carstens, has spoken of the IMF having ‘inadequate resources‘ to respond to a major new economic decline:
This leaves us with the problem of having to improvise in times of crisis. If the Fund cannot do it others will have to do it otherwise the economic costs will be huge.
Carstens was speaking in reference to the IMF’s quota subscriptions. As the institution explains on its website, quotas are the main source of funding for the IMF. Every member of the IMF (currently 189) is assigned a quota, with the largest economies contributing the most.
Up to 25% of a country’s subscription has to be paid in Special Drawing Rights or ‘foreign currencies acceptable to the IMF.’ SDR’s are the IMF’s unit of account, and are made up of the world’s five most prominent currencies – the dollar, the euro, the renminbi, the yen and the pound. The remaining 75% of a nation’s quota must be paid in their own currency.
With the United States being the largest member of the IMF, their quota is the most substantial. As of March 2017, their share was $118 billion. In SDR’s this equates to a value of 82.99 billion. The IMF values SDR’s in dollars – the latest reading shows that the U.S. dollar equivalent of $1 in SDR’s is 72 cents.
According to the IMF, in September 181 members had made all their quota payments, with total quotas standing at $675 billion (475 billion when measured in SDR’s).
We are told that the size of all the quotas combined should be sufficient to combat times of global economic stress. In 2010, the IMF held its 14th General Review of Quotas, the results of which saw the overall quota increase by 100% from 238.5 billion SDR’s to 477 billion SDR’s. These reforms originated off the back of the 2008 financial crisis. As you can see, only 2 billion in quotas remains to be fulfilled.
The reforms also resulted in a realignment of quota shares. China was the main beneficiary, becoming the third biggest member of the IMF with 6.4% of quotas. The U.S. provides the most at 17.4%.
But it was not until January 2016 that the reforms became effective. This was largely due to the U.S. Congress vetoing changes to member voting shares. The current share of votes means that the U.S. maintains its veto over any changes to the IMF’s charter. Without an 85% majority, the charter cannot be altered. As it stands, the U.S. has a 16.5% voting share, enough to delay or frustrate the implementation of reforms.
The consensus amongst globalists today is that the increase in quotas dating back to the 14th General Review did not go far enough. In an article I posted last December (‘Hidden Amongst the Furore: Synchronised Warnings From the BIS and the IMF‘), I referred to a speech given by BIS General Manager Agustin Carstens in which he warned that half of the IMF’s lending capacity comes from ‘borrowing arrangements‘ which are set to expire over the next couple of years. Without these arrangements being renewed, along with an increase in national quotas, Carstens said that ‘‘the IMF’s fire power could be severely curtailed’:
There has been limited progress in scaling up the IMF’s core resources. Without this, the global safety net remains incomplete.
The day after Carstens’ warning, First Deputy Managing Director IMF, David Lipton, reinforced worries over the quotas. Most notably, he commented that at the onset of the 2008 financial crisis the IMF was under resourced. To prevent this from happening again, Lipton called for a ‘continued commitment to strengthen the safety net, with a strong and adequately financed IMF at its center’:
Too much power remains vested in national regulators and supervisors at the expense of an integrated approach across the continent.
The message was very clear – nations must cede a greater level of control to the international level, emboldening the IMF further in the process. Rather tellingly, Lipton made a connection between ‘incomplete reform efforts‘ and ‘rising geopolitical tensions‘.
As ‘tensions‘ continue to germinate, particularly over the UK’s separation from the EU, the 15th General Quota Review is approaching. As with the 14th review, the IMF will use it as an ‘opportunity to assess the appropriate size and composition of the IMF’s resources and to continue the process of governance reforms‘.
Those who regularly follow communications from the IMF will know that the ‘process of governance reforms‘ is perpetual. It is akin to a pyramidal structure. Once a specific level of reform is attained, the organisation then moves on to the next level. All the while they are directing more power and control to the centre (where the IMF and BIS Operate) and away from individual nation states.
The IMF have set a deadline of completing the 15th quota review ‘no later than the 2019 Annual Meetings.’ These take place in the third week of October.
I have previously suggested that with quotas now coming up for renewal, the IMF appear increasingly well placed to use the instability and dysfunction of geopolitical events – in particular the advancement of protectionism and nationalism – as cover to position the financial system closer to the implementation of a global currency. To get there, however, will require significant economic turbulence.
As ever with globalists, this would be a gradual process. In my last blog post, I outlined how the BIS are now openly targeting 2025 as a staging post for major reforms. At the heart of these reforms would appear to be the introduction of central bank digital currencies.
Before that could happen, the current composition of currencies in the IMF’s SDR would likely be ‘reformed‘. The dollar holds a 42% share, with the Euro on 31%, the renminbi 11% and the yuan and sterling both on 8%. To move to a global currency framework, the dominance of the dollar – as well as its world reserve status – would need to be sacrificed. From there the IMF would be able to lay the foundations for the gradual assimilation of national currencies using the SDR system.
As Brandon Smith has written extensively about over at Alt-Market, it is conceivable that by doing this national currencies would become tied to SDR’s, meaning the IMF could effectively end up dictating the value of those currencies in a plan to harmonise them to the point where they are worth a similar value to each other. With exchange rates at parity, machinations towards a new global currency would then be the next step in the process.
This scale of reform would be in keeping with what Christine Lagarde labelled back in 2014 as a ‘reset‘. Utilising the platform of the World Economic Forum, she called for a reset in global monetary policy along with reform of the financial sector and the regulatory environment.
In the here and now, the IMF has the opportunity to use the 15th review as a vehicle to strengthen the role of the SDR through an increase in quotas. It also offers the chance for the ‘realignment‘ of quota shares away from the United States, perhaps to China and Euro denominated nations. This would see the Renminbi and Euro allocations increase at the expense of the U.S. dollar.
I would point out, however, that major reforms on behalf of globalists often coincide with geopolitical disorder. Without the onset of chaos, it becomes a lot more difficult for them to broaden their level of control. This follows the mantra ‘order out of chaos‘, which co-founder of the Trilateral Commission Zbigniew Brzezinski wrote about in great detail up to his death in 2017.
An indication of impending conflict came in December last year with the news that the U.S. is publicly opposed to increasing quotas. David Malpass, Under Secretary of the Treasury for International Affairs, was unequivocal on the matter:
We are opposed to changes in quotas, given that the IMF has ample resources to achieve its mission. We will be seeking a constructive size for IMF resources, but recognise that the IMF is just one part of the global financial system.
The mainstream press perceived the U.S. position as a rejection of the ‘global order‘, citing Donald Trump’s policy of putting ‘America First‘ in terms of its foreign policy.
Mark Sobel, a former U.S. representative on the IMF’s executive board, cautioned that ‘turning our backs on a Fund quota increase will be seen across the globe as another U.S. snub of multilateralism, global institutions, and a rules-based order.’
The method for inducing conflict that ultimately works to the benefit of globalists is the tried and tested Hegelian Dialectic. This is when two opposing sides are created (the thesis vs the antithesis) and put into a situation of conflict. In this instance, the intractable position of the U.S. against building up the IMF’s resources embodies the thesis, with the antithesis being the IMF seeking to advance its role on the international stage by strengthening the SDR system through the reform of quota shares.
Historically, conflict of this nature has been designed to play out gradually and lead to a predetermined synthesis. Predetermined because in the preceding years globalists would have already tabled their vision of the future through their own communications. Substantial changes within society are not always an organic occurrence or an act of coincidence.
For the IMF, the desired conclusion of economic conflict (based on the documentation available) would be the roll out of a global currency framework over the next decade – in line with the United Nations Agenda 2030 programme for ‘sustainable development‘.
Speaking of the UN, on the eve of the IMF Spring Meetings a former under secretary of the organisation – Jose Antonio Ocampo – wrote an op-ed for Project Syndicate calling for the IMF to reform the SDR into a ‘true global currency‘. Ocampo also noted that 2019 marks the 75th anniversary of the IMF’s creation, and the 50th for the SDR:
They represent an ideal opportunity to transform the SDR into a true global currency that would strengthen the international monetary system. Policymakers should seize it.
The reader can judge for themselves whether this intervention was purely coincidental or not.
As the Spring Meetings commence, it is worth while recalling that before becoming head of the IMF, Christine Lagarde spoke candidly about how crisis can breed opportunity. In 2010 the IMF published a survey that determined crisis as an ‘opportunity for deeper, faster Integration‘. Then managing director Dominique Strauss-Kahn used the 2008 financial collapse to explain:
The crisis shows when the weather is quiet, existing institutions work well enough. But when you have a storm, then weaknesses of this institution appear clearly. And better coordination and stronger coordination in economic policy in my view is absolutely needed.
In short, crisis opens up numerous avenues for reform and a further path towards outright globalist supremacy. It is highly doubtful that the IMF and the BIS will let the next economic crisis go to waste.