This fall, a handful of students at the law school examined legal aspects of the International Monetary Fund (IMF) with Sean Hagan, general counsel and director of the legal department at the Fund. Hagan joined associate professor Adam Feibelman in teaching a seminar on Law, Finance, and Development: Legal Perspectives on the IMF.
Hagan, who has been a distinguished fellow at the law school's Center on Banking and Finance during the fall, collaborated with Feibelman in designing the syllabus for the seminar, joined the seminar in person three times, once by video-conference, and has responded to students' short essays throughout the term.
Along with the World Bank, the IMF was created in the wake of World War II in meetings held in Bretton Woods, New Hampshire. It became a legal entity in 1945 after 29 countries ratified the Fund's Articles of Agreement. Today, 185 countries are members of the Fund.
The purposes of the Fund, as articulated in its articles of agreement, are "to promote international monetary cooperation"; "to facilitate the expansion and balanced growth of international trade"; "to promote [currency] exchange stability"; to help establish a multilateral payments system; and to provide financial resources to members facing an acute "disequilibrium" in the balance of payments with other countries. The primary function of the Fund at its inception was to articulate and enforce exchange rate policies of its members, which were essentially fixed pursuant to the Fund's Articles.
In the latter part of the 20th century, after the fixed-exchange-rate regime was abandoned, the Fund began to play a broader role providing financial and technical assistance to developing countries and former Soviet states then transitioning into the global economy.
In the seminar, students explored the Fund as a legal domain - its internal workings as a legal entity and its external activities as an important international financial institution.
In particular, the seminar considered issues relating to the jurisdiction of the IMF, its governance structure, the scope and modes of its consultations with its members, its lending facilities, and its practice of conditional lending.
The seminar also gave significant attention to the IMF's role in the unfolding global economic crisis and the impact of the crisis on the IMF itself.
"This would have been a fascinating seminar any time, but the economic crisis that unfolded throughout the summer and fall made this an especially interesting time to be studying the IMF," says Feibelman. "This crisis has provided a fascinating test for the IMF, which was much criticized in the wake of previous crises. Students in the seminar watched in real time as topics like conditionality and governance within the Fund took center-stage."
In recent weeks, notes Feibelman, the IMF has introduced a new short-term liquidity facility, a facility that does not involve conditionality. Furthermore, the declaration of participants in the recent G-20 summit appears to signal comprehensive reforms in the governance of the IMF and to reaffirm that the Fund will play a central role in the international monetary system in the coming years.
"It is quite likely that the adoption of the new facility and the G-20 declaration will come to be understood as pivotal moments in the life of the Fund," says Feibelman.
"We were incredibly fortunate to have Mr. Hagan participating in the seminar throughout this time," says Feibelman. "The Fund is a complicated and controversial institution. The students were impressed that Mr. Hagan did not shy away from the tough questions they posed about the Fund and its activities."
Lissa Broome, Wachovia Professor of Law and director of the Center for Banking and Finance, recognizes the importance of providing students timely lessons on global marketplace issues.
"This is the kind of seminar that helps prepare our students for working in a rapidly changing global arena," says Broome. "[Feibelman's] students now have a more nuanced appreciation of the jurisdictional constraints on the IMF's activities, the practical and political challenges it faces going forward, and the criticism it engenders."