OeNB Seminar

Es gilt das gesprochene Wort.

The current solutions for the Eurosystem’s representation within the G7 and in the IMF might be rather transitional in nature. 12 Member States of the Union share the same currency and monetary policy, but discussions with third countries and international financial and economic institutions are conducted on a fragmented basis. The Eurozone speaks with one voice only for some work within the OECD. 

Five years into EMU, there is an increasing pressure to make further progress on the role and performance of Europe in the international economic and monetary field. A single euro area/EU representation in international financial institutions and fora seems to be the only viable long-term solution. 

This holds both for informal fora, such as the G7, and formal ones such as the IMF. The euro zone has everything to gain from being eventually represented by the Commission, in close conjunction with all the bodies concerned. 

The result of this fragmentation is that the economic power of the Union is not at all reflected in the International Monetary Fund or the World Bank (despite the fact that the EU-15 shareholding in the IMF is larger than the US one). That means that the EU fails to exploit its economic potential to promote its values, interests and policies at the global level. Also here, the EU needs to speak with one voice. 

In addition to concerns related to Europe’s performance at international level, there is also increasingly strong pressure from emerging markets and from non-European G7 countries for streamlining the European over-representation in international bodies. Europe currently holds eight out of twenty-four chairs in the IMF, while four Member States are present in the G7. 

The Convention proposes a new provision on the external representation of the euro and thus to establish the principle of a single representation. The existence of the eurogroup is formally recognised for the first time in a protocol annexed to the Constitution 

Tusek/Farnleitner CONV 224/02 

European representation in international financial institutions: IMF and G-7 

1. The EU member states conjointly hold over 30% of quotas in the International Monetary Fund (with the Euro Zone accounting for about 23%), whereas the US has only around 17%. Yet the US, and to a lesser extent the G-7, determine the IMF agenda and decisions. In the IMF, the Europeans must succeed in the medium-term in mutually aligning their voting patterns and ultimately in achieving a homogeneous EU representation. This long-term aim has also been agreed by the Finance Ministers at their informal spring meeting in Oviedo. There is no reason why we should not tackle the necessary intermediate steps towards formalised coordination quickly. If all the countries of the EURO zone were to speak and to vote with one voice, they would form an effective platform from which the EU could eventually work for a reliable organization of global financial markets and for a functioning surveillance of financial corporations that engage in irresponsible speculation. A first visible success of this kind of joint action would be for the IMF – in accordance with its Articles of Agreement – to move its headquarters to Europe (Art. XIII Section 1. The principal office of the Fund shall be located in the territory of the member having the largest quota, and agencies or branch offices may be established in the territories of other members.) 

2 . In the important forum of the G-7/8, the Union e ven acts by way of playing musical chairs. Since experience shows that Europe’s international weight is inversely proportionate to the number of its representatives, the European Union should be represented by one common representative at G-7/8 summits acting on the basis of one common position. The same logic applies to the Security Council of the United Nations.