Thursday, March 26, 2009

A new job for Montek?

Nicholas Stern, former Chief Economist of the World Bank, suggests a new institution for warning against sources of instability in the world economy. He says the existing institutions- WB, IMF, BIS- are unsuited for the purpose because there is interference all the time from representatives on the board of various countries. (How very interesting!- so treat the next IMF country review with the utmost scepticism).

Stern thinks such an institution could be created without huge costs:

With 100 high-quality staff and outstanding leadership, such an institution could be very effective. A budget of $20m (€15m, £14m) per annum would be sufficient. An endowment of $500m would give it the independence it needs for 30 years or more. Its board would be advisory, non-resident and meet not more than twice a year. The board would have the power to appoint the head (for, say, a seven-year term) and ensure its finances are well managed. It would have no power to interfere with, or comment on, its assessments.
Stern says that a requirement for independence of such an institution is that it should preferably be headed by somebody outside the G-8. He lists several candidates. One is our own Montek Ahluwalia. So, if the Congress/UPA does not return to power, there is still hope for Montek.

1 comment:

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