It's done! The IMF's governance has been rearranged for the first time since its inception.
Today's G20 meeting produced an agreement that reduced the EU's representation from 9 to 7 among the IMF's 24-member board of governors (an astounding, more than 8% loss of influence for the EU over the running of the de facto governing agency of the world economy), in favour of what they call, in a remarkable euphemism, "developing markets." According another source, the United States retains its 4 seats (16.65% share) and veto power. The combined strength of the US and EU representation has just gone from over fifty percent (13 of the 24 seats) to less than fifty percent (11 of the 24). This is bound to rearrange, retool and intensify, the relationship between the USA and the EU in the IMF. Given how volatile the world economy can be expected in the near future, this nexus may turn out to be even more important than before.
IMF Managing Director Dominique Strauss-Kahn paid tribute, in his statement today, "to the United States for having triggered the system and to the Europeans for having answered positively to this. The Europeans committed themselves to reducing their presence on the Board by two chairs, which is a huge effort." Strauss-Kahn repeated this phrase twice: "... a huge effort."
I can believe him that it was a huge effort (apparently the host, the South Korean Prime Minister, jovially threatened to close the airports until the meeting produces a result)--but what is much more important is that this decision marks a change in the way the world economy is run. In retrospect, we might find this change epochal. And I'd be astonished if there was not more to come. -- With that, interestingly, the Managing Director of the IMF seems to agree: Strauss-Kahn thinks that "it doesn’t mean that there won’t be any reform going forward. The world is changing. There will be other reforms."
I suspect most of the coverage will focus on how China promised greater flexibility with the RMB, and how the US promised restraint over its adjustment policies. But the structural transformation is at least as significant for the future of global governance.