The eight-member panel, appointed by IMF Managing Director Dominique Strauss-Kahn last year to look into ways to make the IMF more effective as the main overseer of the global financial system, said the IMF’s advice had lost traction and influence.
The current global financial crisis has highlighted the need for a strong mulitlateral institution at the center of the global financial system, the panel added.
"The institution requires a strong and respected voice, human and financial resources appropriate for its mission, and it must be accountable to its members," it said in a report published on Wednesday.
The panel included Michel Camdessus, former IMF managing director; Robert Rubin, former U.S. treasury secretary and former Citigroup senior counselor; Mohamed El-Erian, co-chief executive of Pimco; Sri Mulyani Indrawati, Indonesian finance minister; Guillermo Ortiz, Mexico’s central bank governor; and Amartya Sen, a Harvard University professor.
The panel said the proposed council of ministers would provide a more direct political voice to the Fund’s decisions and should be made up of finance ministers or officials with a high-level of authority to take decisions related to the economy.
The panel did not give details on how big the council should be, but some IMF officials have suggested its make-up and size should be similar to the Group of 20, made up of developed and developing nations.
It also said the council was a way to give emerging market economies a greater say in the IMF and recommended accelerating the process for reviewing voting power in the Fund, as well as reconfiguring chairs on the IMF board, which is dominated by Europeans.
The panel said major economic powers, such as the United States, Japan and European countries, had preferred to resolve the world’s monetary and financial issues in smaller international fora, which had diminished commitment to multilateral solutions.
The panel suggested the reform measures should be agreed as part of a single package and include other changes such as:
* Expanding the IMF’s surveillance mandate beyond exchange rate policies to give it greater oversight of broader economic and financial issues affecting the world economy.
* Introducing a new transparent and merit-based system for appointing the head of the institution, which has always been a European.
* Lowering the voting threshhold on critical decisions from 85 percent to 70-75 percent and extending double majorities to a wider range of decisions, ensuring that a majority of members can have a say
* Elevating the executive board’s function from day-to-day overseer to a more supervisory role.