ABSTRACT

The International Monetary Fund (IMF or Fund) has been one of the key institutions within the global economic governance framework ever since its establishment more than sixty years ago. During these years, the Fund has been a major instrument contributing to global macroeconomic and financial stability. In order to remain relevant and able to provide an adequate answer to the many changes in the global area, the Fund’s mandate has shifted over the years (for an extensive overview see Peet, 2003, or Cesarano, 2006). Its initial mandate consisted of enhancing the free movement of payments in international trade and fix currency exchanges in order to provide more stability in international financial markets. Over the years, the Fund has broadened its focus and currently deals with the surveillance, the prevention and the resolution of financial crises as well (see Eichengreen, 1996; Mahieu et al., 2005). Notwithstanding its adjusting capability, criticism on its functioning and legitimacy has increasingly been voiced over the last years. Most critics target the Fund’s conditional funding and its failure to anticipate or correctly tackle crises (see Blustein, 2003; Vreeland, 2007). These critics have recently received new impetus as the IMF so far failed to address the challenges of the surge in regional monetary and financial arrangements (Henning, 2005; Bini Smaghi, 2009). A particular point of contention concerns the representation of the European countries in the Fund. The European countries have a long history with the Fund. Indeed, one of the Fund’s initial missions was to promote economic growth and trade (in the context of the Bretton Woods Agreements) in the ravished and war-torn European countries (Boughton, 2004). This chapter intends to evaluate the academic literature and debate on the relation between ‘Europe’ and the IMF. A first section provides a brief institutional lay-out of the IMF, needed for the remainder of the chapter. The second section investigates the current representation of European countries at the Fund. A third section explores the coordination between European countries in the Fund. The fourth section provides an overview of recent developments in the relation between the Fund and Europe. A last section deals with the question of the establishment of a single European seat at the IMF, which recently attracted considerable research and debate. The chapter ends with some concluding remarks and future research directions.