Monetary Regionalism: A Challenge to the IMF

The purpose of this paper is to investigate why, until recently, the phenomenon of monetary regionalism has not properly been taken into account by the International Monetary Fund (IMF), and whether monetary regionalism is likely to affect the current debate on the IMF governance reform. Before describing the main features of existing Regional Monetary Integrations (RMIs) and their relations with the Fund, we will briefly summarize the WTO rules governing members’ participation in Regional Trade Arrangements (RTAs). Our intent is to emphasize the difference between the international monetary system and the international trading system with respect to the issue of regionalism. The IMF Articles do not contain a provision similar to GATT Art. XXIV on RTAs. However, the success of RMIs in ensuring stability is pushing the IMF to recognise their systemic importance. This evolution, which started with the formalization of surveillance procedures over currency unions, could eventually lead to the unions’ admittance as separate members.