The policy-making body of the International Monetary Fund (the International Monetary and Financial Committee IMFC) was chaired for the first time by Italian Finance Minister Tommaso Padoa-Schioppa. The main topics of the discussions of the ministers and central bank governors was the recent turmoil in the financial markets and its impact on global growth prospects, the quota and voice reform in the Fund and the long-term financing of the IMF.[1] 

The situation in the financial markets was also considered by the Group of Ten. In addition, the central bank governors and finance ministers of the eleven most important industrial nations dealt with the renewal of the General Agreements to Borrow of the Fund. With the latter, the G10 countries will make available 17 billion Special Drawing Rights (approximately CHF 30 billion) in the event of a crisis. In the meeting, Federal Councillor Merz referred to the significance of this instrument as a second line of defence in the event of an international financial crisis and explicitly emphasised the importance of the members of the Group of Ten, which primarily are reliable guarantors for the stability of the international financial system.

A further main point on the IMFC's agenda was the quota and voice reform in the Fund. The main goal of the reform is country representation which takes account of recent global economic developments. Along with a renewed quota increase for the dynamic IMF members, the influence of the poor countries should also be ensured. An important component of the reform is the discussion of a new formula to calculate the quotas of the individual member states.

Although there was no agreement on all the elements of the reform, on several important points there has been convergence of the positions. This is the case on the one hand for the individual variables which should be adopted in the formula and on the other for the increase of the basic votes. A country is entitled to the latter independently of the quota and are thus of primary importance for the standing of the developing countries.

Switzerland fully supports this reform, which is important for the legitimacy of the IMF. Federal Councillor Merz once again expressed his goal to find a solution which is balanced and in line with economic criteria. He called for an arrangement which adequately takes into account the importance and openness which a financial centre possesses. In addition he expressed opposition to include GDP being measured at purchasing power parity in the formula.

[1] Cf. the press release from the Federal Department of Finance, the Federal Department of Economic Affairs and the Federal Department of Foreign Affairs dated 17 October 2007

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