Could the IMF run out of money?

While there may be a lot of money tucked away that countries can use to bail one another out, recent events have put the IMF in a tough spot, both financially and politically. Like any other multinational agency, the IMF is only as good as its member countries. If a big country, say, South Korea, feels the heat from international lenders, the IMF could be looking at a $50 billion or $100 billion request. After the Asian financial crises of the mid-1990s, the IMF’s forward commitment capacity fell as low as 20 billion “Special Drawing Rights” (an IMF unit then equivalent to around $27 billion); it tripled only after the IMF increased the quota it charged member countries by 45 percent. Will there be political will to supplement the IMF in the coming weeks? Or will a new fund, topped up by new currency reserves, be necessary, as Gordon Brown has mused? In the “New Bretton Woods” era, the IMF might not go under, but it may get left behind.

Explainer thanks Massachusetts Institute of Technology professor and former IMF chief economist Simon Johnson, co-founder of baselinescenario.com and Yoshiko Kamata and Bill Murray of the International Monetary Fund.