IMF issue bonds instead of loans? Many implications

A VERY intriguing idea got pushed today at G20 financial ministers’ talks at International Monetary Fund headquarters in Washington, D.C.

And that’s for the IMF to issue bonds, not loans, to countries in need of international financial assistance. The four BRIC countries are the pushers, while the U.S. and Eurozone are fighting it. Indeed, it appears BRIC countries are balking at ponying up massive new monies for the IMF unless the West actually discusses this as an idea on the table.

The bonus is that bonds would probably reduce to some degree the power of the “austerity measures” stick that the IMF has used for decades against developing nations, which is precisely why the West is resisting.

Little Timmy Geithner at the U.S. Treasury may be the U.S. official on whom the repayment for all our years of Chinese borrowing starts falling due.

And, along that line, bonds instead of loans, I think, could be played with more, to go partway toward Beijing wanting a backup global reserve currency. That, too, is certainly why the US is cool to the idea for a second reason.