"During the 1997–98 Asian financial crisis, when
middle-income countries were hard hit by big capital outflows, there was an
effort by China, Japan, Taiwan and other countries to put together an Asian
Monetary Fund to offer balance of payments support. Washington vetoed the idea, insisting that all assistance had to go
through the International Monetary Fund. The result was a mess, including an
unnecessarily deep regional recession, as the IMF failed to act as a lender of
last resort and then attached all kinds of harmful and unnecessary conditions to its lending.
But
the world has changed a lot in the past 15 years. Last week the BRICS countries
(Brazil, Russia, India, China and South Africa) decided to form the Contingent
Reserve Arrangement (CRA) and the New Development Bank (NDB), and the United
States will not have a veto this time. These new
institutions could mark a turning point for the international financial
system."
