France’s Central Bank Chief Advocates for IMF and World Bank Preservation

WASHINGTON (Reuters) – France’s central bank chief called on Tuesday for preserving the International Monetary Fund (IMF) and the World Bank, albeit with a narrower focus on matters such as financial stability and payments.

The future of the IMF and World Bank, which hold their spring meetings this week, has been cast in doubt after Donald Trump’s U.S. administration said it would review its memberships of all multilateral institutions.

Francois Villeroy de Galhau stated that these two Washington-based bodies, which count the United States as their biggest shareholder and are two linchpins of the liberal international order, should continue to exist.

> “Let us preserve the multilateral institutions such as the IMF and World Bank, born and hosted in this great country, with more focused ambitions,” Villeroy said in a speech as he headed to the meetings.

The scope of what Villeroy described as “pragmatic multilateralism” was quite wide, including:
– Financial stability
– Cross-border payments
– Crypto-assets
– Cybersecurity
– The fight against financial crime
– The prevention of extreme climate events

The IMF and World Bank were established after World War II to help rebuild and support war-torn economies, ensuring their stability.

In recent years, they’ve largely lent to poorer countries and increased their focus on issues like climate change, diversity, and inclusion.

Trump administration officials have advised the leaders of both institutions to stay in their respective lanes.

In his speech at the Foreign Policy Association in New York City, Villeroy also reiterated Banque de France’s estimate that tariffs announced by Trump on April 2 — which have since been paused — would shave at least 25 basis points off euro zone growth this year.

He noted that the impact on inflation was “more uncertain” but argued it could overall be negative.

Speaking earlier in Madrid, ECB Vice President Luis de Guindos asserted that tariffs would initially drive up inflation before the resulting lower economic activity brings it back down.