The International Monetary Fund that Dominique Strauss-Kahn took over in autumn 2007 was a markedly different organisation from the one it is today.
Then it was known as a stickler for orthodox fiscal policy that imposed remorseless conditions on countries in difficulty.
The IMF was making losses, it was showing its age, and moreover it had not foreseen the global financial crisis.
Strauss-Kahn set about bringing in major changes to the institution set up in 1945.
At the time he said: “The Fund has to be both relevant and legitimate. Relevant means that the fund has to adapt. to adapt to globalization, to adapt to a new type of financial crisis as we may experience this time starting in the United States, this time with the debate on the sub-prime mortgage. But other kinds of crisis may happen.”
The first task for the new boss was to address the dire state of the Fund’s books. He sold off some of its gold and instigated a shake-up of the management. The IMF today has never been richer. Last year its member states doubled their capital contributions.
Strauss-Kahn also overhauled the workings of the board redistributing voting rights so emerging economies had a bigger say. China moved up to third place in terms of voting power. Brazil, India and Russia gained influence too under the reforms.
Europe abandoned two of the nine seats it had occupied in the boardroom.
Strauss-Kahn pushed major stimulus spending to help troubled states avoid another Great Depression during the worst of the financial crisis. He then turned to debt-strangled European states which is not the IMF’s traditional domaine.
The Fund had become a kind of ‘International Rescue’ providing 100-billion euros for three foundering eurozone countries: Greece, Ireland and Portugal and four other EU members: Hungary, Latvia, Romania and Poland.
In return, the IMF demanded draconian austerity measures. And among those having to tighten their belts on the streets there was little love lost for the financial firemen of Washington DC.
But Strauss-Kahn also rescued the image of the Fund, by cancelling interest payments for the poorest countries.
But his early departure from the job put paid to his plan to reshape the entire international monetary system. Strauss-Kahn’s dream was to make the IMF pivotal in any such ambitious reform but he left with it still on the drawing board.