Brian Kelly

3 Critical Tests for the IMF

I think our points are similar. Regardless if the bonds are IMF bonds or corporate bonds priced in SDRs, if the market accepts them then I would call that a successful test.


On Apr 07 08:01 PM elh nyc wrote:

> I am not sure you have the IMF "bond" issue explained correctly.
> There are issues being discussed about IMF "bonds" as in "issues
> denominated in SDRs" and the traditional IMF lending as you mention
> with their FCL package to Mexico. These are two separate issues.
>
>
> In order for the IMF to "become the world's central bank", the proposal
> was to have its "currency" SDRs become a "global" currency. It is
> really not relevant whether the issuer of SDR-denominated bonds are
> the IMF, it just requires that SDRs become commonly acceptable capital
> markets instruments--liquid markets where people, companies and governments
> can borrow and save. Next time Siemens wants to issue 5 year debt,
> what odds do you give it that they choose SDRs instead of Euros?
> How about California Water Authority 20 years? SDRs or USD?
>
> SDRs are currently a mixture of USD, GBP, Yen and Euro. The Chinese
> were pushing for use of the SDR. Were they thinking the Yuan would
> be an appropriate fifth portion? With a closed capital account?
>
>
> The IMF is far away from being a global central bank. It didn't
> even get firm commitments for the increases in capital for next year--only
> "promises to get the commitments in January 2010" by which time the
> current $215 billion will be gone.
>
> The G20 should take responsibility for the things it has done by
> enumerating each additional protectionist measure put into place
> since the initial meeting last year when they promised not to implement
> any, instead of writing empty self congratulatory communiques. When
> progress is made, fine. I see economic deterioration and denial.
>
>