Andrew Bailey Urges IMF To Address Global Trade Imbalances With Reforms

The governor of the Bank of England, Andrew Bailey, is calling for significant reforms at the International Monetary Fund (IMF) to enhance its role in tackling global economic imbalances. Speaking at his annual Mansion House address, Bailey urged the IMF to work more closely with the World Trade Organisation (WTO) in delivering detailed assessments of trade systems and addressing the root causes of persistent trade disparities.

This rare intervention from the central banker follows mounting criticism of the IMF, particularly from the United States, over its handling of global trade issues. Scott Bessent, the US Treasury Secretary, has accused the IMF of being overly lenient towards China in its scrutiny of global trade flows. Bessent described the institution as reluctant to question the established framework and failing to respond to inequalities caused by China’s trade surpluses and global manufacturing dominance.

Andrew Bailey acknowledged certain aspects of these criticisms, describing reform within the IMF as not just necessary, but overdue. He suggested “modest” structural changes to the Fund, focusing on its annual country reports. These reports, Bailey believes, should offer sharper critiques of economic policies and highlight imbalances that could destabilise economies in the long term. He also called for a greater integration of trade analysis between the IMF and the WTO, emphasising the importance of collaboration in addressing complex global challenges.

The imbalance in global trade has long been a subject of contention, with China often at the centre of the debate. Its huge trade surplus and weak domestic consumption continue to rattle international markets, while the United States blames these disparities for contributing to its own economic struggles. In his speech, Bailey called for greater accountability. He challenged both Washington and Beijing to provide answers and take responsibility for their internal policies, which he characterised as key drivers of external imbalances.

The governor stressed that addressing these issues requires a multilateral effort and remarked on the need for transparency from all sides. Bailey argued that the US government should explain the sustainability of its internal imbalances while demanding fairer trade systems overseas. Simultaneously, he urged China to outline concrete plans to boost domestic consumption and reduce its dependence on trade surpluses.

According to Bailey, the IMF has a critical role to play in promoting balanced and sustainable adjustment in the global economy. He underscored the Fund’s responsibility to issue rigorous and independent assessments of economic systems and predict potential crises before they arise. His recommendations signal a push for the IMF to adopt a more proactive stance in addressing disparities that impact global financial stability.

Bailey’s remarks underline the growing pressure for multilateral institutions like the IMF to adapt to the realities of an increasingly interconnected global economy. As central banks and governments worldwide grapple with mounting challenges, the need for coordinated efforts among international organisations has become more pressing than ever.