China’s frustration with the slow progress of IMF governance reform has contributed to the evolution of a China-led architecture that locks out the West – the latest examples being the New Development Bank and the Credit Reserve Arrangement established by the BRICS. This column argues that these institutions are not a threat to the IMF and the World Bank, but they complicate global economic governance. It is unlikely that Europe’s ‘troika’ model – where the IMF works jointly with regional financing facilities – will be possible in Asia. We perhaps need a New Bretton Woods.

The Bretton Woods agreement – which is 70 years old this month – established three institutions to promote law and order in international economic relations:

• The IMF to promote macroeconomic stability,
• The GATT (and its successor, the WTO) to ensure an open trading environment, and
• The World Bank to provide development finance for poverty reduction.

The smooth operation of this rules-based, US-led global economic architecture contributed to the unprecedented economic growth and worldwide prosperity of the post-WWII period.