Contest Over New IMF Head as Proxy for Banker Centricity in IMF

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The IMF has brought the major emerging market countries into it's leadership. They are now demanding an open process in appointing the new leader of the IMF. Europe has usually picked the leadership but many view the leading candidates as "bank-centric" That is, they will resist requiring that banks bear some the cost for bailing out countries who may default on their debt. Greece is a classic example of the problem that the IMF faces. Major banks in Europe made the loans to Greece that are at risk. The ECB and the IMF have imposed austerity on Greece which will make it impossible for it to generate the revenues needed to pay down its debt. The alternative is to have the banks take a haircut on their bad loans and give Greece some breathing room to service its debt.

This article does not raise the topic of credit default swaps, but they are in the background. Speculators have been using CDS's to bet on Greek default. If Greece restructures its debt that will be an event that enables the speculators to cash in their chips.