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<\/a><\/p>\nWith the United States at the center of the system, the Treasury Department and Federal Reserve Bank are the two most important American institutions in global financial governance \u2013 and the Treasury Secretary and Federal Reserve Chairperson are the world’s two most powerful financial diplomats. Both institutions are headquartered in Washington, D.C., just down the street from the headquarters of the International Monetary Fund (IMF) and World Bank Group, two global financial bodies created in 1944 to manage the world economy on behalf of the rich Western nations that founded them.<\/p>\n
Twice a year, the IMF and the World Bank host large international conferences. The Spring Membership Meeting, typically held in April, and the Annual membership meeting draw a crowd consisting of most of the finance ministers and central bank governors from the IMF\u2019s 188 member nations, representing the Fund’s Governing Board. They descend on D.C. where the meetings are typically held (though occasionally they are hosted in other countries as well), and draw scores of journalists, academics and thousands of bankers and financiers who are eager to meet, greet, wine, dine and make deals with the political decision-makers of the global economy.<\/p>\n
The top five shareholders of the IMF (United States, Japan, Germany, France and U.K.) reflect the membership of an ad-hoc group of finance ministers that began meeting in 1973, thereafter known as the Group of Five (G-5). At the time, U.S. Treasury Secretary George Shultz\u00a0described the group<\/a>\u00a0as \u201ca channel for informal and very frank communication on monetary and other issues, both of a long-term and more immediate character.\u201d But the G-5 was hardly the first of such groups.<\/p>\n In 1962, the Group of Ten (G-10) was formed as a meeting of finance ministers and central bank governors from the rich industrial nations, including the U.S., West Germany, Japan, France, U.K., Italy, Canada, Belgium, Sweden, Netherlands (and eventually Switzerland, although\u00a0the name remained<\/a>\u00a0the same). The G-10\u00a0would meet<\/a>\u00a0alongside the leaders of the IMF, the Organization for Economic Cooperation and Development (OECD) and the Bank for International Settlements (BIS).<\/p>\n Following the U.S. unilateral decision to end the Bretton Woods monetary system in 1971, a series of committees and groups were established to provide forums for major economies of the world to negotiate forming a new monetary system, and to integrate developing economies into the institutional apparatus of global financial governance. The Group of Ten was utilized as one such forum.<\/p>\n In 1972, the G-10 laid the groundwork for the establishment of a special Committee of 20 to be formed within the IMF, whose membership reflected the composition of the IMF Executive Board, but at the ministerial level \u2013 giving it a much higher level of political authority than the board, which\u00a0is composed<\/a>\u00a0of mid-level officials from their respective national finance ministries. The committee would include most G-10 members alongside several developing country representatives, and was formally\u00a0institutionalized<\/a>\u00a0in late 1974 as the “Interim Committee” of the IMF.<\/p>\n (Although the Group of Five was formed in 1973, it wasn\u2019t until 1975 that it held the first meeting at the head of state level, with the addition of Italy to the group. The following year, Canada was invited to participate, and thereafter it was known as the Group of Seven (G-7), effectively functioning as the steering committee for the global economy.)<\/p>\n Fast forward to the mid-1990s, when the G-7 nations\u00a0instructed<\/a>\u00a0the Group of Ten to consult with emerging market economies on ways to reform the global financial architecture in cooperation with major international organizations like the IMF, World Bank, OECD, and BIS, which were increasingly opening their membership and ownership positions to large emerging market economies.<\/p>\n The idea was thus: If developed countries give developing countries a stake in the existing system, they won\u2019t use their new-found wealth and power to oppose that system. And all the while, the West was to remain at the center. Through crisis and collapse and “rescue” efforts led by the IMF, BIS and World Bank, developing and emerging market economies were encouraged to accept Western economic “advice” on how to manage their economies. If they wanted bailouts in the form of loans from international institutions, those countries had to follow conditions that demanded a total restructuring of their economies and societies along G-7 lines \u2013 designed to transform them into modern “market economies” capable of integrating into the larger global economy.<\/p>\n The groundwork was laid out over the following years, and in the course of 1999, the IMF\u2019s Interim Committee was reformed into the International Monetary and Financial Committee (IMFC). The G-10 organized several seminars involving major emerging market economies and, together with the G-7, formed a new group known as the\u00a0Financial Stability Forum<\/a>\u00a0(FSF), a meeting group of central bankers, finance ministers and regulators who were handed responsibility for maintaining financial stability in the world. Finally, 1999 also saw the organizing efforts of the G-7 result in the formation of yet another forum, the Group of Twenty (G-20).<\/p>\n The G-20 was born in December of 1999 at a meeting of finance ministers and central bank governors from the G-7 nations, along with Russia, China, India, Brazil, Indonesia, Korea, Australia, Mexico, Saudi Arabia, South Africa, Turkey, Argentina and the European Union. The\u00a0event<\/a>\u00a0was attended by top officials from the IMF, World Bank and the European Central Bank. But despite all the international noise, the G20 was\u00a0largely the initiative<\/a>\u00a0of two men: Canadian Finance Minister Paul Martin and U.S. Treasury Secretary Lawrence Summers.<\/p>\n The G-7, or G-8 once Russia was invited in, remained the main forum for global economic leadership. But in the midst of the global financial crisis in 2008, the G-20 was the group convened by U.S. President George W. Bush, who brought together heads of state for the first meeting that took place in Washington on November 15. That meeting\u00a0produced an agreement<\/a>\u00a0among G-20 nations to pump trillions of dollars into their economies in order to bail out their banking systems.<\/p>\n