How the United States Can Block the IMF’s Potential Move to China

Alexis Haddock
Vol. 41 Associate Editor

Among the many international organizations lies the powerful purse of the International Monetary Fund (IMF). Founded in 1944, the IMF serves to ensure global financial stability[1] through monitoring public and private sector international payments, creating stable exchange rates that allow flexible currency conversions, resolving sovereign debt crises, expanding international trade, and assisting in developing economies by providing loans.[2] However, a seemingly inevitable change quickly approaches the organization: the move of the headquarters from its 75-year tenure in Washington D.C. to Beijing.[3] A change of this magnitude occurs only if preceded by one of greater importance, the loss of the United States’ dominance within the IMF.[4]  What remains to be seen is whether the United States will resist the relocation of one of the world’s most powerful organizations to avoid the symbolic shift in the world economy.[5] The IMF’s authority stems from 189 countries agreeing to adopt the Articles of Agreement, the charter outlining the purpose of the organization, powers that it holds, code of conduct required of the member countries, and governance structure.[6] Upon membership, each country receives a quota reflective of their relative position in the global economy.[7] The quota determines the allotted votes the country holds, financial commitments required to be fulfilled, and access to IMF financing when in distress.[8]  The weighted voting of the IMF seeks to provide a representative structure which “adequately reflects fundamental changes taking place in the world economy.”[9] This includes a combination of basic votes allotted to each member equally and a number of votes the Board of Governors calculates using a quota formula, factoring the country’s weighted average GDP, openness, economic variability, and international reserves.[10] Each change in a member’s quota must be approved by the relevant member and an 85% majority of the total voting power.[11] The voting structure causes fluid quotas to coincide with a country’s economy in relation to others, controversially resulting in the largest economies holding the most power. The proposed move of the IMF’s principal office location stems from the organization’s Articles of Association.[12] Article XIII Section 1 states that the “principal office of the Fund shall be located in the territory of the member having the largest quota.”[13] Currently, the IMF’s flagship office stands in Washington, D.C. because the United States has always been the largest quota holder.[14] While the United States continues to hold the largest quota at 17.46% of the total IMF quotas,[15] the increasingly competitive Chinese economy may supersede the United States’ economy and quota.[16] Currently, China has 6.09%.[17] However, this fails to accurately reflect the calculated quota of China’s economic merits.[18] Quota reforms may soon correct this discrepancy, closing the gap significantly between the two countries’ quotas.[19] A change in the location of the IMF’s principal office hints at a challenge to American economic power.[20] However, this prediction follows the assumption that China will accept this change. Given quotas must be approved by a majority vote and consent of the member country, China could unilaterally avoid this upcoming situation by declining to alter its quota.[21] The push from China to gain authority within the IMF indicates the unlikelihood of this scenario.[22] Yet financial requirements coincide with raised quotas.[23] Therefore, the increase in dues owed to the IMF could deter China’s desire to raise its quota. Additionally, if the Board of Governors opts to raise China’s quota and China consents, it is possible that other countries would not vote in favor and stop the modification. Under the current quota structure, the United States effectively has veto power because of its large voting bloc preventing an 85% approval of the change. The United States might attempt to block this loss of power through methods within the IMF. By ensuring China’s quota does not supersede its own, the United States can maintain both their power within the IMF and the location of the headquarters. A change in quota initially centers upon the factors used in the quota formula.[24] If China’s factors increase to create a quota that ultimately overcomes the United States’ quota, the United States would have to likewise increase their factors to receive a higher quota or rally enough votes from member countries to hinder the required approval of raising China’s quota. However, the current mechanisms to adjust quotas ensure that the United States can effectively prevent any modifications.[25] New quota reforms are consistently being called for, and this may reduce the ability of the United States to unilaterally sway IMF decisions.[26] The second method available to the United States is through an amendment to the IMF’s Articles of Association. Article 28 of the Articles of Association states that members may bring amendment proposals to the chairman of the Board of Governors.[27] The Board, in turn, can approve the amendment and have the member countries vote to ratify.[28] The United States could propose an amendment altering Article 13 in a way that maintains the principal office’s location in Washington D.C, ensuring that even if the United States lost possession of the largest quota they would at least hold the principal office. Maintaining the head office allows the United States to avoid the IMF’s move to China which is symbolic of a shift in global economic dynamics.[29] Given the proposed amendment would require three-fifths of the members holding 85% of the total voting power, it would require massive cooperation with other member countries.[30] This hinges on the ability of the United States to gain other member countries’ support in keeping the IMF in Washington D.C. Another method may be available through the judicial system. Presenting a claim against an international organization raises questions of jurisdiction and immunity. Although recent developments such as Jam v. IFC provide a narrow avenue for claims in United States courts to reach international organizations, the ability for the United States to do so seems improbable.[31] The newfound weakness in international organizations’ immunity within the United States is not so expansive that it allows countries to bring general claims against them.[32] Further, it is unclear what cause of action the United States would raise even if they had the ability to bring a claim. The Articles of Association, as recognized by the United States upon becoming a member, stated that the location of the principal office would shift to coincide with quotas.[33] Any claim of damages by the United States would likely fail given their previous and indefinite ascension to this charter and its articles. The United States’ most viable method of retaining the principal office of the IMF, and possibly its position as the commanding power, is through methods while working within the organization. However, the ability of the United States to potentially stop the move raises ethical questions of resisting peaceful transitions of power. The need to include influential emerging markets will be matched by the United States’ desire to maintain the status quo.

[1] Articles of Agreement of the IMF art. 1, Dec. 27, 1945, 60 Stat. 1401, 2 U.N.T.S. 39. [2] Aahana S., Workings of the IMF: Achievements and Shortcomings | Economics,, (last visited Oct. 19, 2019). [3] David Lawder, IMF Could be Based in Beijing in a Decade: Lagarde, Reuters (July 24, 2017), [4] José De Gregorio et al., IMF Reform: The Unfinished Agenda, xxi-xxii ((2018), [5] Id. [6] Int’l Monetary Fund, Governance, About the IMF, (last visited Oct. 19, 2019); see also Articles of Agreement of the IMF, supra note 1, art 1. [7] International Monetary Fund, Governance, supra note 6. [8] IMF Quotas, Int’l Monetary Fund, (March 8, 2019), [9] International Monetary Fund, Governance, supra note 6. [10] IMF Quotas, supra note 8. [11] Id. [12] Articles of Agreement of the IMF, supra note 1, art. 13 §1. [13] Id. [14] De Gregorio et al., supra note 4. [15] Int’l Monetary Fund, IMF Members’ Quotas and Voting Power, and IMF Board of Governors, (October 15, 2019), [16] Lawder, supra note 3. [17] Int’l Monetary Fund, IMF Members’ Quotas and Voting Power, and IMF Board of Governors, supra note 15. [18] Sangafowa Coulibaly & Kemal Dervis, The Governance of the International Monetary Fund at age 75, The Brookings Institution (July 1, 2019), [19] Id. [20] De Gregorio et al., supra note 4. [21] IMF Quotas, supra note 8. [22] The Bretton Woods Project, Quota Reform Impasse Likely as IMF Faces Legitimacy Crisis, (July 30, 2019), [23] IMF Quotas, supra note 8. [24] IMF Quotas, supra note 8. [25] Sui-Lee Wee et al., China Urges IMF to Give More Power to Emerging Markets, Reuters (January 15, 2014), [26] Id. [27] Articles of Agreement of the IMF, supra note 1, art. 28. [28] Articles of Agreement of the IMF, supra note 1, art. 28 [29] De Gregorio et al., supra note 4. [30] Articles of Agreement of the IMF, supra note 1, art. 28. [31] Jam v. Int’l Finance Corp., 139 S. Ct. 759, 765 (2019). [32] Id. at 772. [33] Articles of Agreement of the IMF, supra note 1, art. 13 §1. The views expressed in this post represent the views of the post’s author only.