Michel Camdessus

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Michel Camdessus

Michel Camdessus (born 1933) was appointed Managing Director of the International Monetary Fund (IMF) in 1987. Prior to his position with the IMF, Camdessus pursued a financial career in France's political arena.

Michel Camdessus was born in Bayonne, France, on May 1, 1933 and has had a brilliant political career in international finance for more than 35 years. Camdessus followed the typical path for a brilliant young Frenchman by first studying at the University of Paris, then earning postgraduate degrees in economics at the Institute of Political Studies of Paris and the prestigious National School of Administration. He married Brigitte d'Arcy and they have six children.

Camdessus' first political appointment was as "Administrateur Civil" in the French civil service. He joined the Treasury in the Ministry of Finance and Economic Policies in 1960. From 1966-68, he served as financial attacheé to the French delegation at the European Economic Community (EEC) in Brussels and took an active role in Europe's first attempts to define a common value added tax (VAT). After completing his term with the EEC delegation, Camdessus returned to the Treasury, becoming Assistant Director in 1971, Deputy Director in 1974, and Director in 1982.

In the early 1970s, Camdessus' work focused on the internal aspects of the Treasury and he introduced several new solutions for channeling private savings into productive investments. His real interests, however, were in international finance. Beginning in 1978, Camdessus was deeply involved in the development of the European Monetary System (EMS). He became administrator of the Central Bank of West African States in 1978 and devoted much of his attention to these developing countries.

During the years 1978-84, Camdessus skill as Chairman of the Paris Club, the main forum for rescheduling debt between countries, gained him considerable respect from developing countries; he worked closely with both the World Bank and the International Monetary Fund (IMF) during these years. Camdessus was also instrumental in formulating economic and financial policies for industrial countries and he strongly endorsed efforts by the five major industrialized nations, known as the Group of Five, or G-5, to develop better monetary policy co-ordination. (The group of industrialized nations was later known as the Group of Seven, or G-7.) From December 1982 until December 1984 he served as Chairman of the Monetary Committee of the European Economic Community (EEC).

As the French socialist government moved from a previously loose monetary policy and protectionist tendencies to new policies during the early 1980s, Camdessus' influence helped shape his country's financial re-orientation.

At the Versailles summit in 1982, Camdessus negotiated an agreement with Beryl Sprinkel, then U.S. Secretary of the Treasury, that granted the IMF new responsibilities for surveillance of exchange rates between the major currencies. Then, in 1983, Camdessus was named Alternate Governor of the IMF for France, and in November 1984, he was appointed Governor of the Bank of France, a position that also entitled him to a seat on the EMS Governors' Committee. During this tenure he supported Tokyo's 1986 economic summit decision to use specific indicators to control the movements of exchange rates. He also supported the 1985 Plaza Hotel agreement.

By the time Camdessus assumed office as Managing Director of the IMF on January 16, 1987, he had considerable experience in managing both the monetary problems of industrial nations and the economic difficulties of the Third World. His first challenge was to seek long-term solutions to the global debt crisis. Camdessus had previously advocated "enlarged access" to IMF credits in addition to new Special Drawing Rights (SDR) allocations but member countries did not agree to the terms.

Under his leadership a number of new economic instruments were implemented, including an enhancement of the existing Structural Adjustment Facility (December, 1987), the creation of a Contingency and Compensatory Financing Facility (August, 1988), an improvement of the medium-term Extended Fund Facility (June, 1988), and the adoption of a new debt strategy (May, 1989). The new debt strategy included use of the IMF's own resources to help countries finance interest payments in debt reduction operations.

Camdessus also called for a doubling of member countries' total contributions, or quotas. However this latter plan was strongly resisted by the United States and other countries.

Camdessus' years as Managing Director of the IMF have not been without problems. In early 1997, the IMF's policy-setting Interim Committee reached a tentative agreement on the creation of new Special Drawing Rights (SDRs) that would benefit new member countries; no new SDRs had been allocated since the late 1970s. (Many countries, including the United States, fear that the creation of new SDRs would increase world liquidity and cause higher inflation.) Another of Camdessus' goals, also facing strong opposition, is to bring all member holdings up to 33% of their quotas. He has also called for a doubling of IMF quotas, the reserves of gold and currency that nations pledge to the organization and from which they can draw in the event of financial necessity. There have already been eleven unsuccessful reviews of quotas since the IMF was founded in 1945; Camdessus' goal is a difficult one. There are currently 181 member countries in the IMF with total SDR quotas equivalent to $200 billion U.S. dollars.

Over the past ten years, in an effort to revamp the IMF's public image and to keep the fund consistent with his own philosophical convictions, Camdessus, in his role as Governor of the IMF, has given increased attention to the impact of structural adjustments on the poor in developing countries. He has repeatedly urged private banks to adopt a more accommodating approach toward debtor countries, asking them to take part in debt relief schemes and provide new monies to aid the resumption of growth.

Camdessus' call for greater attention by the IMF to the social consequences of adjustment as well as for its increased commitment to long-term debt relief operations has drawn criticism from those who want the IMF to remain committed to only its original, narrowly-defined mandates, that of creating financial/monetary policies and providing for short-term adjustments.

Camdessus has frequently referred to the complex interrelationships of a global economy. His viewpoint of IMF's global role is reflected in comments made in 1995, as Mexico's devaluation of the peso began. "Financial globalization has heightened the challenges of fostering stable foreign exchange and financial markets, and of preventing and resolving financial crises…. Capitol flows don't move … capriciously. They move because financial markets feel somewhere something's wrong in the macroeconomic sectors in some countries."

In March, 1997, at a meeting with the Association of Southeast Asian Nations (ASEAN), Camdessus told the group that unless the ASEAN speeds the pace of its own financial liberalization, global economic stability and growth will be affected. Over the past ten years, Camdessus has repeatedly emphasized the shared responsibility of creditors and debtors in solving international debt crises, he has called upon industrialized nations to maintain orderly monetary policies, and he has insisted that debtor countries bear the primary responsibility for restoring their own economic health through sustained adjustment programs.

Further Reading

Michel Camdessus is listed in The International Who's Who and in the European Biographical Dictionary. Feature articles describing his approach to international economics appeared at the time of his election as IMF managing director in The Banker (January 1987) and The Economist (January 8, 1987). The policy changes he brought to the IMF are analyzed in South (No. 8, 1988). Most of his speeches and press conferences as IMF director can be found in the bimonthly IMF Survey.