The role of private governance in global finance

The International Monetary Fund (IMF) is central to governance of the international financial system. The IMF is a capacious organization, and conditional lending is just one of its varied activities. The concept of 'organized hypocrisy', as developed by Catherine Weaver in her study of policymaking at the World Bank, helps explain the puzzle of why the IMF's very public rediscovery of the merits of Keynesian demand stimulus during this crisis had little impact on the design of its lending programmes, which remained pro-cyclical. All institutions involved in global economic governance face conflicting demands that emanate from their external environments. Building the counter-cyclical turn into its lending programmes would require the IMF's economists to jettison the core elements of an approach that it had relied upon for half a century. The IMF's material resources proved useful to members during the depths of the European sovereign debt crisis.