Central banking is the latest battleground in the IMF’s war on democracy, equality, and the people of the Global South. DSA must fight back.
From Ecuador to the Democratic Republic of Congo, the International Monetary Fund (IMF) has been ramping up its efforts to force loan recipient countries to relinquish democratic control of their central banks. The DSA International Committee (DSA IC) condemns these assaults, and urges mobilization to fight back.
The IMF has long played a leading role as enforcer of a global economic system that benefits the few at the expense of the many, and wealthy nations at the expense of the Global South. As one of the most powerful financial institutions in the world, the IMF has used loan “conditions” to systematically force on the Global South an agenda of austerity, deregulation, and privatization—with devastating effect.
As a part of this wider agenda, the IMF has recently escalated its efforts to force recipient countries to divest control of their own central banks and let these institutions run of their own accord—a policy that is misguidingly known as central bank “independence.” This year, the IMF forced Ecuador to hand over its central bank in April, followed by the Democratic Republic of Congo in May, and, just recently, Ukraine.
Central banks play a critical role not only in determining the distribution of wealth, but also in financing the response to crises like COVID-19 and climate change. They have enormous power to set the space for fiscal policy and critical social spending, to raise or curb inflation, growth, and employment, and to shape the nature of investment within a country. Central bankers represent their countries at virtually every gathering of the economic elite the world over. The values that guide them should be democratically determined by the people they serve. But, by mandating “independence”—by insulating these banks from the will and the needs of their electorates—the IMF hands that choice over to the same kinds of institutional players that have steered the world into crisis after crisis and are failing disastrously to meet their climate transition obligations before it’s too late. Far from making them “independent,” this policy simply leaves the banks unaccountable to their people.
The government of the United States has outsize influence in the direction of the IMF, and the DSA IC demands that Congress and President Biden direct U.S. representative and financial power within the IMF toward ending this policy once and for all.
From central bank “independence” to the wider IMF agenda, we—socialists living in the heart of global empire—have an obligation to help break the shackles that bind the Global South, and to fight for an alternative, decolonial global economic system that works for both people and planet.