BY EDWARD THEOPHILUS

The International Monetary Fund was established after the Briton-Wood Agreement as a solution for international financial crisis, which was encouraged by the ad hoc work of certain European countries. These countries attempted to gain trade advantages by ad hoc changes in currency values that was meant devaluation of currency to attract demand for products and services. When there was an international financial system without required controls, many countries with economic power had opportunities to behave own way. The clear evidence was France attempted to gain trade advantages in the 1930s using the devaluation of the currency unit. It was not a serious feeling for Sri Lanka, where was a British colony with a strong financial backing. During this period, there was not a Central bank and the Currency Board System was backed by the British Financial System and Sri Lanka rupee was to the British Sterling pound.   

The IMF has been operated for the past seventy years and it is observed by many financial experts that the IMF supported the US financial system and associated countries with strong reserves in US dollars. When the Briton-wood proposal came to the world, there was a suggestion to introduce an international currency called BANCOR, but it was not eventuated. If the BANCOR introduced the current issues, the connection with the value of national currencies in many countries could have been avoided and many problems related to the currency value of developed and developing countries could have been resolved by the new currency, BANCOR. This is an independent opinion based on the current problems.

Malaysia has proposed to establish an Asian Monetary Fund and the structure and objectives of the proposed fund are unknown for many countries and analysts. My feeling is it should not be an institute like Asian Development Bank because the operational pattern and objectives of the proposed Asian Monetary Fund should be aligned to the International Monetary Fund, which provides financial supports for the balance of payment adjustments process in many countries. The balance of payment arrangement is a complex process which involves looking at various controls in a country.  It will be a quite arduous task for many countries, but the proposed fund should be limited to the Asian region and such operations will be easier to considering the problems of the Asian region. 

When considering an international financial support system of the IMF, it is a broader area with contrast problems, which may be associated with cultural and religious aspects. The proposed fund should be limited to a specific region and the major question related to the proposal of Malaysia when there is an international problem is it is right to conder only for one region, ignoring many areas of the world. When considering the Malaysian proposal, I feel it is an egotistical proposal, ignoring many areas of the world and, in the modern world, it is not possible to stick with a bumptious way. Any proposal involves with a more than one country it should be considered broader way.     

Balance of payment rectifying and funding for this purpose are required by many countries in the world and establishing a flexible organisation than the current IMF would be a complicated task as many countries have problems to contribute funds for the working structure of the proposed fund. Which countries agree with the proposed fund and how they are going to contribute to the structure?  The other significant point is whether the proposed fund will work as a competitive organisation with the IMF or an organisation similar to the IMF. International financing system seems it is very complicated and the operation of such a system would be entangled in the current operation.  

International news detail many points less considering the complex environment and people who know about the gigantic task related to the operation of international fund understand the complicated role and dilemmas of the role. The current IMF associated with a bunch of organizations such as IBRD, ADA and other funds which are working together and provide a role helping each other. Could the proposed Asian monetary Fund play a complimentary role?   

The proposed Asian Monetary Fund needs a large sum of capital to enable providing financial support for members countries, especially for the balance of payment arrangement process requires more funds to provide for member countries in the Asian region when there is a trend of increasing inflation that increases resulting unexpected challenges such as COVID-19, how will adjust and adapt the dynamic environment by the proposed fund. Changing the current mode of international financial system is a compact task that should involve in many issues of different countries and the operational justice is giving justice to all countries, which is the adamantine problem.

Countries which are supposed to agree with the proposal need to broadly discuss the issues and combine them to organise to structure the proposed organisation.