The IMF Has Lost its Influence

Sometimes historic changes take place quietly, while no one is looking. Great institutions lose power with a whimper rather than a bang. Such is the case of the International Monetary Fund, which is holding its annual autumn meetings with the World Bank this weekend in Washington.

Just a few years ago, the IMF was the most powerful financial institution in the world. When financial and economic crises swept across East Asia in 1997, it was the IMF that laid down the painful conditions that governments had to meet in order to access more than $120 billion in foreign funds.

When the financial contagion spread to Russia and Brazil, the IMF followed, brokering the multibillion dollar loans that - however unsuccessfully - were intended to prop up overvalued currencies on the brink of collapse.

Those days are over. After their nightmarish experience with the fund in 1997-1998, Asian countries began to pile up huge international foreign exchange reserves - partly so they would never have to go begging to the IMF again. But the final blow to the fund came from the country that Anne Krueger, first deputy managing director of the fund, reportedly calls "the A-word": Argentina.