Should the IMF behave like a Sovereign Wealth Fund?

Stephen Jen says yes, here is one media story on his new paper:

With many of its members having already repaid their
debts, the IMF’s annual income from interest repayments has slumped to
new lows recently, forcing it to make major cutbacks. New managing
director Dominique Strauss-Kahn has announced a 15pc cut in staff
levels and an overhaul of its non-core activities.

Mr Jen said such drastic cutbacks were unwise, since the IMF’s role as a monitor of the world economy could be compromised.

now is tantamount to downsizing a fire department when there is a low
incidence of fire," he said, adding that the Fund should sell some of
its gold to reinvest in instruments with a reliable income. The Fund
owns 103.4m ounces of gold, worth around $92bn (£47bn) at current
prices – up from just $23bn five years ago. But while the cache of
metal has appreciated in value, it does not bring in a regular flow of

"The IMF has a great deal of scope to enhance its investment returns without exposing itself to undue market risk," said Mr Jen.

result could be the creation of a supra-national fund worth as much as
$100bn. Mr Jen predicted that it could be worth $130bn in 10 years’
time. This would be of a size similar to Russia and Singapore’s funds.

Here is a previous post on the IMF’s funding problems.  Here is a previous post on whether we should abolish the IMF.  Jen’s idea may not appeal to many people; the question is whether you can come up with something better.


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