Christine Lagarde, former managing director of the International Monetary Fund (IMF), speaks during an interview with Xinhua in Washington D.C., the United States, on Sept. 19, 2019. (Xinhua/Liu Jie)
by Xiong Maoling, Gao Pan, Hu Yousong
WASHINGTON, Oct. 7 (Xinhua) -- When Christine Lagarde left the International Monetary Fund (IMF), one thing she was proud of is that the global lender has "grown stronger, more respected and more relevant."
The IMF growth is important because all countries, big or small, rich or poor, need multilateralism to promote economic development and to respond to global challenges, Lagarde told Xinhua recently at the IMF headquarters.
Lagarde stepped down as the IMF managing director on Sept. 12 after eight years of service, and will become president of the European Central Bank (ECB) on Nov. 1.
GLOBALIZATION "HERE TO STAY"
"No country, however big it is, can be an island because capitals from around the world go across the borders," said Lagarde.
"The Sub-Saharan African countries that need to reach the sustainable development goals by 2030 will not do it on their own. They will need support of others. Those regions of the world such as Europe that are wide open to trade movements need multilateralism to continue to thrive," she added.
For the success of what she calls a "new multilateralism," the former IMF chief said it must combine global trade and domestic constraints, must be more focused on people, and must be inclusive, more accountable and more transparent.
Amid a growing anti-globalization and anti-free trade sentiment in some countries, Lagarde said she thinks globalization is "here to stay" but will probably have a different phase.
"It will have to be closer to the people, more attentive to the allocation of revenue, profits and reduction of inequality in many corners of the world," she said.
"I also think that it will have to marry better the domestic policies that have to look after those who are not benefiting from the global movements," Lagarde said, adding that more attention has to be paid to different cultures as well.
In a farewell video posted on Twitter, Lagarde said the IMF has not only "wallet" and "brain," but also "heart." A heart for people, she told Xinhua, "We should look at the impact of what we provide with our wallet and with our brain."
Speaking of the U.S.-China trade tensions, Lagarde, who served as the French trade minister from 2005 to 2007, said she has huge respect for those who endeavor to resolve sticky issues because trade issues are "incredibly difficult."
From her experience as a negotiator in various capacities, Lagarde said she thinks "it's always helpful to start with what can be the upside" so that each party sees "not what it is going to lose, but what it has to gain."
CHINA'S GROWING ROLE
Among Lagarde's biggest legacies at the IMF is the ratification of the 2010 quota and governance reforms, which shifted some 6 percent of quota shares towards emerging markets, including China, which has emerged as the third largest shareholder of the global lender.
"It was difficult to get it agreed, no question, and my predecessor did that. But to get it done was a laborious effort, but we got it done," Lagarde said. "Quotas were doubled and the allocation was completely changed so that all the large emerging market economies were in our top 10 shareholders."
After the reform, China's voting power increased to 6 percent, compared with the 16.5 percent for the United States, which can veto any boost in any member's IMF quota, as any such change requires an 85 percent weighted majority vote of its members.
Lagarde said the quota reform is a major development needed to go further. "There has to be a momentum so that all countries participate in the IMF as they contribute to economic development."
Another highlight during her tenure is adding the Chinese renminbi (RMB) to the IMF's Special Drawing Rights (SDR) basket.
"I think the monetary system is more stable as a result of all large economic players cooperating with each other. Cooperation in the form of a basket of currencies is one form of cooperation," Lagarde said, and urged "more of it."
Lagarde first visited China over 20 years ago. While enjoying "a very productive" personal relationship with the Chinese side over the past few years, she said, "I think the IMF has a strong relationship with China and we have demonstrated time and again that we were in close relationship," adding that the global lender has provided as much "brain power" in giving proper advice.
STRONGER FUND, IMPRESSIVE LEGACY
Taking over the IMF after the financial crisis, Lagarde had mobilized resources on many fronts to better support member countries in confronting challenges and spillovers, bolstering the fund's lending capacity, stepping up crisis lending, and providing risk analysis and policy advice.
When taking office in July 2011, Lagarde inherited the then euro zone debt crisis. Working with the European Union (EU), the former French finance minister led the IMF in assistance to Cyprus, Ireland, Greece, and Portugal, striving to prevent the crisis from spreading to the whole euro zone.
In 2018, when Argentina risked financial turmoil, the IMF rolled out the largest bailout loan program in its 75-year history in efforts to avoid devastating ripple effects among emerging markets.
With programs with 90 countries or half of its members and a wallet doubled to 1 trillion U.S. dollars, the IMF, as Lagarde put it, is now "more relevant than ever" and "stronger because it has more financial capacity."
And the IMF is more respected, partly because "we have been able to speak truth to power," Lagarde said. It has also expanded the fields of advice as well as data and information collection to include, for example, women's part in economy, inequality, climate change and anti-corruption.
Recalling the financial crisis and the international efforts against a great depression, Lagarde said, "Many lessons were learned at the time, which is why new sets of regulations were agreed," making the global economy better prepared.
In her advice to the professional women, Lagarde, 63, who is the first woman to lead the ECB, said, "Don't regard one part of your life as secondary to the other and you will succeed with the multiple dimensions that you bring, be it maternity, be it professional dedication, whatever you choose, keep it all together."
"If it's going to take a bit more time, that's okay because we live a longer life than men anyway, so they can try to catch up," she teased.
