Since January the IMF has been working on the issuing of a first bond issue. The bonds would be denominated in SDRs, with a maturity of 1 year and offered to Central Banks. Speculation has been rife for some time that the BRIC countries would be the principal purchasers of such bonds. The BRIC countries – Brazil, Russia, India and China met together just several days ago to work on possible terms of the bonds. It is noteworthy that the BRICs again are seen as a self actualizing group and it appears that all are prepared to lend to the IMF in this way though it appears that the BRICs would prefer that their be a secondary market for the bonds to improve their liquidity.
While the BRIC targeting is noteworthy in and of itself, it would appear additionally that the bond issue is a means for the BRICs to contribute to nations in distress but also to avoid providing longer term commitments to the IMF. Some, like Cornell’s Eswar Prasad, formerly the chief of the financial studies division in the research department of the IMF, see the bond issue as a means to put pressure on the IMF and leading members to increase the voting shares of countries as India and China. As pointed out by Bob Davis in a Wall Street Journal article, dated April 27, 2009, the, “BRIC countries believe the IMF’s needs for funds gives them additional leverage.”
Meanwhile I am off to Washington to be present at the release of, Power and Restraint: A Shared Vision for the US-China Relationship. The book a product principally of Harvard and CASS experts is designed to examine the inevitably of the “China Threat” school. As the jacket reads, “This group of experts in politics, economics, international security and environmental studies set out to establish consensus on potentially contentious issues and elaborate areas where the two nations can work together to achieve common goals.” More on that after the official release.