Why Stanley Fischer should head the IMF
The European stranglehold over the headship of the IMF needs to be replaced by an appointment by merit alone
It is clear to all except Europe’s leaders that the time has come to rip up the unwritten rule that the head of the IMF should be a European national. The job should go to the best candidate irrespective of nationality and if that person happens to be from a developing country, so be it. It would be a damning indictment of the Fund if Europe’s preferred choice, France’s finance minister, Christine Lagarde, was shooed into the top role without a proper assessment of her credentials and without consideration of other equally qualified people.
Names from the developing world being bandied about include Mexico’s central bank governor, Agustin Carstens; former Turkish economy minister Kemal Dervis; and Singapore’s finance chief, Tharman Shanmugaratnam. All are worthy candidates.
Yet Euromoney is mystified why one name is missing from the list of those being discussed. To our mind this person is the ideal candidate. He straddles the developed and emerging worlds, is a current policymaker, has private-sector experience, has a theoretical and practical understanding of finance and economics that is second to none, knows the Fund inside out, and is extremely familiar with firefighting financial crises. That person is Stanley Fischer.
Fischer was born in Zambia, educated in the UK and US, and is now an Israeli citizen, where he successfully heads the central bank – he was Euromoney’s choice of best central bank governor last year.
In the late 1980s he was chief economist at the World Bank. Then in 1994 he took on the role for which he is best known – first deputy managing director of the IMF. During his seven years in the role Fischer and his colleagues faced several financial crises, most famously in east Asia.
The IMF’s response to the Asian crisis has been criticized for following an ideologically driven script that failed to take into account the specific problems facing each country in distress. Could Fischer and the Fund have managed the situation better? Yes. But without the Fund’s help the chances are the crisis would have been far worse and for that Fischer and his then boss, Michel Camdessus, should take some credit. His front-line experience and insights into what the Fund got right and what it got wrong in Asia might prove invaluable now in resolving the problems besetting Europe.
His three years at Citi, between 2002 and 2005, is also invaluable experience. One of the complaints of the private sector is that too many heads of multilateral institutions have little understanding of their needs. That is not a criticism that could be levelled at Fischer.
Fischer’s intellectual credentials and his stature in the financial world are beyond question. When he was a professor at MIT in the late 1970s he was a PhD adviser to a certain Ben Bernanke. This is a man whose influence within financial circles goes to the very top.
July 6, 2011