Clear about what the IMF’s job is, and what it isn’t – my letter in today’s Financial Times

Sir, Contrary to Philip Stephens’ claim (“Our pro-Europeans must prepare for a plebiscite”, November 8), the Labour party supports an increase in the UK’s International Monetary Fund subscription because of the vital role the IMF plays in the global economy.

However, we are also clear that the IMF’s job is to support individual countries with solvency crises, not to solve a structural problem caused by eurozone countries being unable to agree the necessary steps to support and maintain their monetary union. As you say in your editorial “Rescuing Europe” (November 9), “the eurozone has what it takes to save itself”. That is why this summer we said that additional funding for the IMF should be held back until the details of the permanent eurozone bail-out fund had been agreed.

The only way properly to ensure market confidence in the eurozone is for the European Central Bank, alongside the bail-out fund, to be given the political support it needs to act as lender of last resort when liquidity problems arise. That is the logic of the monetary union these 17 countries signed up to.

The IMF has a vital role to play around the world and should have the necessary resources it needs to do that, but there should be no IMF funding to plug the gap in the eurozone’s bail-out fund and do the job the ECB should be doing.

Ed Balls, Shadow Chancellor of the Exchequer, House of Commons, UK

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Posted November 10th, 2011 by Ed