Voting Power Implications of a Unified European Representation at the IMF
We consider some of the implications of a proposed reform of the voting system of the IMF in which EU countries cease to be separately represented and are replaced by a single combined representative of the European bloc. The voting weight of the EU bloc is reduced accordingly. We analyse two cases: the Eurozone of 12 countries and the European Union of 25. Using voting power analysis we show that the reform could be very beneficial for the governance of the IMF, enhancing the voting power of individual member countries as a consequence of two large countervailing voting blocs. Specifically we analyse a range of EU voting weights and find the following for ordinary decisions requiring a simple majority: (1) All countries other than those of the EU and USA unambiguously gain power (measured absolutely or relatively); (2) The sum of powers of the EU bloc and USA is minimized when they have voting parity ; (3) The power of every other non-EU member is maximized when the EU and USA have parity ; (4) Each EU member could gain power - despite losing its seat and the reduction in EU voting weight - depending on the EU voting system that is adopted ; (5) The USA loses voting power (both absolutely and relatively) over ordinary decisions but retains its unilateral veto over special majority (85%) decisions (as does the EU bloc).
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- Géraldine Mahieu & Dirk Ooms & Stéphane Rottier, 2003. "The Governance of the International Monetary Fund with a Single EU Chair," Financial Stability Review, National Bank of Belgium, vol. 1(1), pages 173-188, June.
- Lorenzo Bini Smaghi, 2004. "A Single EU Seat in the IMF?," Journal of Common Market Studies, Wiley Blackwell, vol. 42(2), pages 229-248, 06.
- Dan S. Felsenthal & Moshé Machover, 1998. "The Measurement of Voting Power," Books, Edward Elgar, number 1489, December.
- Agnès Bénassy-Quéré & Carlos Bowles, 2002. "A European Voice at the IMF," La Lettre du CEPII, CEPII research center, issue 216.
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