As the International Monetary Fund embarks on a second round of reforms to give developing countries more say in the institution, the World Bank signalled today that it was ready to go the same route.
A vote of the IMF's 184 member countries this week overwhelmingly backed an increase in the voting power of China, Mexico, South Korea and Turkey. A second stage of reforms is to follow by 2008 as the institution strives to give emerging countries a bigger voice to match their growing clout in the world economy.
Without this legitimacy, the IMF will be unable to wield the influence it needs as it expands its role in monitoring the world economy, including closer scrutiny of the exchange rate policies of emerging countries.
Wrapping up the meeting of the IMF and World Bank in Singapore, IMF Managing Director Rodrigo Rato recognised the task ahead would be politically more challenging, with richer countries worried they will lose influence and developing nations pushing for more.
While the IMF reforms won majority support, 23 member countries, mainly from Latin America and the Middle East, voted against. Argentina, Brazil, India, Egypt and Iran were among the dissenters, arguing that the initial changes did not go far enough to reflect a shift in global economic power away from the rich countries that founded the fund in 1945.
The Group of Seven industrial nations alone - the United States, Japan, Germany, Britain, France, Italy and Canada - wield 45 per cent of the fund's quotas, or membership subscriptions, which largely determine voting power.
"It is clear there are a lot of challenges ahead of us ... but I think there is a will to understand that multilateralism is at the heart of our efforts in responding to your needs," Mr Rato said.
At the IMF's sister organisation, World Bank President Paul Wolfowitz said the bank would pursue changes to its governance structures, which, like those of the fund, are dominated by the United States and Europe.
"Rodrigo, you have accomplished it, I congratulate you," Mr Wolfowitz told Rato at the end of the meetings.
"Fair weight and voice to all member countries is essential for our credibility and effectiveness and we recognise we can and must do more." "You have set an example for us on the bank's side and we intend to follow your example," Mr Wolfowitz said.