Last week, I wrote this:
We should also expand the role and capabilities of the IMF, just in case it becomes necessary to bailout a fairly large country (e.g. Great Britain?).
Today, we learn that Japan has agreed to loan $100bn to the IMF, and the Fund is also considering issuing bonds for the first time in its history. This sudden need for extra cash has not arisen because the Fund is short, but because it expects to be dealing with bigger problems in the future than it has in the past:
The IMF isn't in danger of running out of money, said deputy managing director John Lipsky, though the fund has made commitments to lend about $50 billion in recent months to Pakistan, Iceland and a clutch of Eastern European countries, and is talking to others.
But the organization has wanted for months to double its lending ability to about $500 billion from $250 billion, to bolster confidence that it could handle other borrowers amid the crisis.
Asked whether Western European countries, outside tiny Iceland, might turn to the IMF for loans if the crisis worsens, Mr. Lipsky said, "in the current circumstances, the right approach is 'never say never.'" The IMF's executive board is expected to discuss potential new sources of funding next month.
10 years ago, in the wake of the Asian Financial Crisis, Japan tried to establish the Asian Monetary Fund to directly compete with the IMF by providing loans to needy Asian countries with fewer strings attached. The effort was scuttled by the US, but many observers saw that moment as the beginning of the end of IMF relevance. Now, Japan is the one shoring up the IMF so it will have the resources to stabilize more and larger countries (presumably, so those countries will be in a position to buy Japanese export goods). The fact that the IMF is looking for hundreds of billions more funding is a bad sign; it indicates to me that the IMF has updated its beliefs and now thinks it might have to step in and bail out a major economy. In any case, the IMF is making a push for renewed influence, and nobody seems to be stepping in their way.
Once again, it appears that the New Economic Order is gonna look a lot like the Old Economic Order.
UPDATE: Emmanuel pointed out in the comments that this is somewhat old news (from mid-November). I missed it the first time around, and apparently the Wall Street Journal did as well.