US official pushes for IMF reform, praises AIIB

A senior US Treasury official expects the International Monetary Fund (IMF) to have a chief from outside Europe in the not near future.

Nathan Sheets, the US undersecretary of treasury for international affairs, was talking about IMF reform on Tuesday when he was asked if IMF managing director would come from emerging economies such as China and Brazil.

"I do expect that in the not too distant future, there will be discussions of managing directors from other parts of the world. And I think that is altogether appropriate and the way it should be," he told the talk at the Center for Strategic and International Studies in Washington.

He said the discussion would seek to find the most qualified and effective people to continue to move forward in the senior leadership of the IMF.

As a tacit agreement between the US and European nations, the IMF has always been headed by a European while the World Bank is presided over by an American. That has raised eyebrows over the years when emerging economies seek to have a bigger say in international financial institutions.

"My sense is very much that the managing director at the IMF must be chosen based on competence, on experience and on the broad set of qualities and attributes that person brings to the table," Sheets said, praising the current managing director Christine Lagarde, a French, as being "exceptionally effective in that position."

After a five-year delay and harsh warning from Lagarde, the US Congress approved the IMF 2010 quota and governance reforms last December. The reform doubled IMF's permanent resources and gave a greater say to emerging markets and other underrepresented countries. The reforms preserved US voting share.

"The 2010 reforms made important progress, but we are not finished reforming the Fund," Sheets said, adding that the US is working to further modernize the IMF's system of governance and improve its capacity to deal with evolving challenges.

He said as emerging economies grow, they desire and deserve a greater stake in the institutions at the center of the global economy. "We believe that further enhancing the voice of emerging markets at the IMF is necessary to preserve the legitimacy and effectiveness of the institution," Sheets said.