US Treasury Secretary calls for IMF reform

Jacob Lew sets out the case for the US’ continued role in economic leadership through global engagement

US Treasury Secretary Jacob Lew, who has put forward the case for the nation's continued role in economic leadership by means of global engagement 

In a speech for the Council on Foreign Relations, US Treasury Secretary Jacob Lew called for the US to maintain its leading role within the global economy and financial system through the continued cooperation with other key economic powers and global institutions.

Noting the importance of the IMF in securing post-war prosperity in both America and abroad, Lew noted that in the changing economic landscape of the 21st century, the US “needs to embrace new players on the global economic stage and make sure they meet the standards of the system we created, and that we have a strong say in any new standards”.

Global engagement was vital, Lew said: the US “must make the choices necessary to ensure both the future of the international architecture we built and America’s position in it”. In terms of global economic engagement and maintaining America’s preeminent role, Lew noted the past achievements of the Obama administration, including “IMF reform, Trade Promotion Authority, and reauthorisation of the Export-Import Bank”.

However, with the current administration outgoing, he laid out a number of policies that the US must continue to pursue, to the benefit of the world and the US itself.

Lew argued that the US must take up the cause of making the IMF more aggressive in addressing “critical issues like exchange rates, current account imbalances, and shortfalls in global aggregate demand”. Lew added that the fund should also “continue to promote greater transparency among its members when it comes to economic data, especially as it relates foreign reserves”.

Alongside this, he noted that the World Bank and other regional development banks must become more efficient and effective. Lew also argued for the US to continue pushing for new trade agreements such as TPP, which will help secure improved “labour and environmental provisions, robust protections for trade in services, and controls on the behaviour of state-owned enterprises to ensure fair competition”.

While the US should maintain global economic leadership and ensure that the architecture of the global financial system and economy should continue to benefit America, Lew also argued that cooperation with other rising powers was also vital: “As the two largest economies, the US and China also have a unique responsibility to work together” to advance shared prosperity, maintain a constructive global economic order and make progress on critical challenges like climate change.

This year, he noted, the two countries will hold their seventh US-China Strategic and Economic Dialogue, in which the crucial issues of “China’s shift to toward consumption-led growth and greater transparency and predictability in its policymaking” will be addressed.

Published on the same day as his speech, Lew set out his vision for both greater global cooperation under US leadership in greater depth for an essay in Foreign Affairs.