September 28, 2007

Senate Banking Chairman Dodd Urges New IMF Director to Ensure China’s Compliance with Exchange Rate Obligations

Washington, D.C. – Senator Chris Dodd, D-Conn., Chairman of the Senate Committee on Banking, Housing and Urban Affairs, today made the following statement in response to the selection of Dominique Strauss-Kahn to be the Managing Director of the International Monetary Fund:
    “I congratulate Mr. Strauss-Kahn on being selected for this post. The IMF is the only international financial institution mandated to address the critical issue of currency manipulation by member countries, which is expressly prohibited under Article IV of the Articles of Agreement. Regrettably, one of my chief concerns with the IMF to date has been the lack of strong leadership and firm surveillance over member countries’ exchange rate policies. The IMF has been slow and ineffective in its actions to ensure compliance with Article IV while China continues to intervene in currency markets to keep the value of the yuan artificially low and to provide its exporters with a substantial advantage in international trade. This practice has contributed to the loss of over three million manufacturing jobs in the United States since 2001 and also to historic bilateral and global trade imbalances and uncertainty over global growth patterns, the valuation of other currencies, and the future direction of interest rates. “Declining confidence in the IMF’s ability to carry out this core function regarding exchange rates has fueled a debate over the effectiveness and relevance of the IMF and the merits of reforming the IMF’s governance and income model in a way that would inappropriately benefit members who violate the Articles of Agreement. I am hopeful that Mr. Strauss-Kahn will exert strong leadership on the exchange rate issue and restore the IMF’s reputation as the pre-eminent international financial institution for promoting solutions to global financial instability. Furthermore, I remain firmly committed to pressing forward with bipartisan currency reform legislation to level the playing field for American workers and businesses, which was authored by myself and Senator Richard, R-Ala., and overwhelmingly approved by the Senate Banking Committee in August. This is too important an issue for American workers and businesses and our nation’s economic security and prosperity.”
Senators Dodd and Shelby introduced S. 1677, the Currency Reform and Financial Markets Access Act of 2007, on June 21 and the measure was overwhelmingly approved by the Senate Banking Committee on August 1.