Ben S. Bernanke, Chairman, Federal Reserve Bank

Ben S. Bernanke was appointed on Oct. 24 to become the chairman of the Federal

Reserve Board. Prior to his nomination, he was the Chairman of the President's Council

of Economic Advisers (Federal Reserve Bank, 2005).Dr. Bernanke is a distinguished

economist, who has published various scholarly materials in the area of monetary policy

and macroeconomics.

Dr. Bernanke was born on December 13, 1953, in Augusta, Georgia. He graduated from

Harvard University in1975 with a B.A. in economics and earned a Ph.D. in economics

from the Massachusetts Institute of Technology in1979 (Washington Post, 2005). Prior to

his political appointments, Dr. Bernanke was a Professor of Economics and Public

Affairs at Princeton University and Stanford University.

Bernanke is likely to experience pressure from the White House to endorse economic

policies reflecting the views of the current administration. His critics say, having been a

senior economic adviser to the President, “Bush has gotten to know him, and feels in

control” (Tierney, 2005). During his Senate hearing, Mr. Bernanke refuted those

criticisms and assured the committee that the Federal Reserve Board will remain

independent from political pressure.

As regards the objectives, I expect the objectives and policies of the Fed to remain the

same because the United States economy has enjoyed favorable growth under the

leadership of Alan Greenspan. Mr. Bernanke is more likely to maintain continuity with

the policies and strategies put forward by Greenspan.

In choosing his monetary policy, I expect Mr. Bernake to put much emphasis on

containing inflation rate and price stability. However, in achieving this objective, Mr.

Bernanke will differ from Greenspan on how to stabilize inflation. Mr. Bernake is a vivid

supporter of inflation targeting, of which the central bank sets a numerical target on

inflation rate (Wall Street Journal, 2005). Bernanke argues that this method provides

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certainty of monetary policy and it is important for long-term price stability. He also

contends that low and stable price inflation provides a favorable atmosphere for

economic growth and job creation (Washington Post, 2005).

I also expect Mr. Bernanke to take a very active role in maintaining the stability of U.S

financial system. Given his background, he has the expertise and interest in stabilizing

U.S. banking system which happens to play a major role in global financial markets (Fed,

2005). The Fed will play a more active role in supervising and regulating the

international activities of U.S banks and the activities of foreign banks operating in the

U.S.

I also expect Mr. Bernanke to be a strong supporter for free trade and its benefits. In his

recent interview, he argued that trade provides enormous opportunities for U.S.

companies and generates high –value jobs for American workers (The Region, 2004).

Finally, I think the activity level of the Federal Reserve board will be determined by the

growth rate of U.S economy. If the economy continues to grow strongly, the activity

level of the Federal Reserve board will have no major changes. However, if economic

growth stagnates or slows down, pressure will mount for the Fed to intervene in the

market thus increasing its activity level to a significant percentage.

Paul Wolfowitz, President, World Bank:

Paul Wolfowitz was chosen by President Bush to become the President of the World on

March 16, 2005 (World Bank, 2005). Before his appointment to the World Bank, Mr.

Wolfowitz served as Deputy Secretary of Defense responsible for policy formulation and

was also a key planner of the Iraq war (Washington Post, 2005).

Mr. Wolfowitz has a Bachelor’s degree in Mathematics from Cornell University and a

Ph.D in Political Science from the University of Chicago (World Bank, 2005). In his long

career as a government official, he also served as a dean at Paul H. Nitze School of

Advanced International Studies of Johns Hopkins University. His lack of expertise in

international development or finance does not affect his reputation. His service as

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ambassador to Indonesia, assistant secretary of state for East Asian and Pacific affairs

will prove his expertise in developing countries (World Bank, 2005).

Mr. Wolfowitz being a senior architect of the Iraq war will be pressured by Bush

administration to channel considerable amount of development aid to finance the

reconstruction efforts of Iraq (Washington Post, 2005). Wolfowitz, a member of neo-con

group and a stronger supporter of liberal democracy and free-market economics will exert

pressure for developing countries to embrace such ideas to get aid (Stephen Hayes,

2005).In order to please his base in Washington, Mr. Wolfowitz will use the World

Bank's antipoverty aid to reward Washington's friends and advance the Bush

administration's ideological agenda.

I expect the objectives of the bank to remain the same but Mr. Wolfowitz will put more

sector emphasis on the Bank's commitment to poverty reduction, good governance,

education, health-especially the fight of HIV/AIDS, and the environment (World Bank,

2005). Wolfowitz has expressed special interest in the bank's goal of fighting poverty in

Africa and the rest of the world.

The bank under Wolfowitz is more likely to increase its activities in Africa, and Asia in

the programs to reduce poverty and HIV/AIDS. The bank will also extend it programs in

Middle East. The programs in the Middle East will focus on promotion of liberal

democracy and market reform. A close attention will be given to Iraq where the U.S.

government is involved in national building effort. Mr. Wolfowitz, is a strong advocate of

debt relief for Iraq (Washington Post).

I expect the activity level of the bank to increase by 5% during Mr. Wolfowitz tenure.

This can be attributed to his personal commitment to promote democracy, fight

corruption and poverty reduction in developing countries. These programs require

extensive amount of financial and human resources to be fully implemented. Mr. Wolfitz

promise to involve poor countries in the decision making process at the World Bank will

lead to increased activities in loan determination at the Bank.

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Rodrigo de Rato, Managing Director, International Monetary Fund

Rodrigo de Rato is the Managing Director of the International Monetary Fund. He was

selected on May 4, 2004 to become the head of the IMF following the resignation of Mr.

Horst Köhler (IMF, 2005). Prior to his appointment, Mr. Rodrigo held key economic post

with the government of Spain. He was Minister of Economy and Vice President for

Economic Affairs for the Government of Spain (IMF, 2005).Mr. Rato earned a law

degree from Universidad Complutense in Madrid, and an MBA from the University of

California at Berkeley.

Mr. Rato, formerly a member of the European Union’s Economic and Finance Minister is

likely to be lobbied by the E.U to champion their cause. I expect the objectives of the

IMF to remain the same in the year 2006 but with prospects of change in assessing the

risks facing the global economy and financial markets (IMF, 2005).

I expect the IMF to be active in formulating specific steps to increase global economic

surveillance and to strengthen its activities in emerging markets (IMF, 2005). This will

enable the fund to monitor financial and economic activities within nations in order to

maintain global economic stability. I also think the fund will strengthen its support to low

incoming countries in their effort to reduce poverty and achieving the Millennium

Development Goals (IMF, 2005). The fund will be very active in assisting poor countries

formulate policies and design strong instititution that are capable of uplifting members

out of poverty.

I also expect the fund to play an active role in financing members with temporary balance

of payment problems (IMF, 2005). Although the global economic outlook looks better

many low income countries needs assistance to implement policy programs. IMF’s

technical assistance to member countries will increase significantly in the area

macroeconomic and financial policy formulation. As most countries experience economic

growth, there will be an increased need for training.

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I also expect a strong presence of the fund in emerging market of Eastern Europe, Asia

and countries in Latin America, Africa and the Middle East.

I think the activity level of IMF will increase by 5 % in the 2006 and is expected to

increase because of the new challenges facing the global economy. Areas that are likely

to stimulate IMF activity level are its responsibility of providing guidance on market and

policy development and ensuring global fiscal transparency.

Luis Alberto Moreno, president of the Inter-American Development Bank:

Luis Alberto Moreno was elected to become president of the Inter-American

Development on October 1, 2005. IDB is the largest regional development bank in the

world providing financing for economic and social development projects in Latin

America and the Caribbean (IDB, 2005).Prior to his appointment, Mr. Moreno had served

as Colombia’s ambassador to the United States and was also a minister of Economic

development from 1992-1994 (IDB, 2005). Mr. Moreno has a B.A. s in Business

Administration and Economics from Florida Atlantic University and an MBA from

Thunderbird University (IDB, 2005).

I expect the bank’s objective of supporting economic and social development to remain

the same. However, I expect the campaign to promote social equity and poverty reduction

to increase significantly. Mr. Moreno is likely to face pressure from member countries

seeking infrastructure development loans (Washington Post, 2005).

Moreno’s priority at the bank will be to build a strong private sector in the region and

increase Bank participation in infrastructure finance (IDB, 2005) He will also play a more

active role in empowering poor citizens through poverty reduction programs. IDB will

continue to actively support policy reforms aimed at generating employment

opportunities (IDB, 2005). Moreno is also expected to increase the financial capacity of

Social Entrepreneurship Program (IDB, 2005). This facility extends loans and technical

assistance to private organizations and local governments that promote business

opportunities to the marginalized population.

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The Bank under Moreno will play an important role in integrating member countries

economies and supporting free trade initiative in the Americas (IDB, 2005).

The Bank is expected to increase its infrastructure finance in Latin America and

Caribbean countries. Apart from financing developmental projects, the Bank will support

member countries initiatives of market of liberalization and reform and macroeconomic

stability (IDB, 2005).

Finally, I think the bank’s activities will increase by about 5% due to strong signs of

economic and political stability in the region. I also think the region has expressed a

continued economic growth this year and the increase in the price of commodity price

will continue to fuel growth in the region.

Ambassador John J. Danilovich, CEO, Millennium Challenge Corporation :

John J. Danilovich assumed the responsibility of the Chief Executive Officer for the

Millennium Challenge Corporation on November 7, 2005. Prior to this appointment,

Danilovichs was a United States Ambassador to Brazil and Costa Rica (MCC, 2005). He

has a B.A. in Political Science from Stanford University, and a master's degree in

International Relations from the University of Southern California.

The Millennium Challenge Corporation is a development assistance program with a 1.5

billion budget to help countries that practice the rule of law, spends a considerable

portion of its budget in social programs and encourage economic freedom (MCC, 2005).

I expected ambassador Danilovich, to be under pressure to promote President Bush

agenda of extending democracy and freedom worldwide. In the effort to achieve this

agenda beneficiary countries will be forced to embrace liberal democracy and free-

market economics in order to get assistance (Stephen Hayes, 2005).In order to please his

base in Washington, Danilovich will use MCC to reward Washington's friends and

advance the Bush administration's ideological agenda.

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I expect the objectives of MCC to remain the same but Mr. Danilovich will put more

sector emphasis on countries that embrace sound political, economic and social policies

that are favorable to private capital inflow and increased trade (MCC, 2005). MCC is also

expected to channel considerable amount of development assistance to Reduce Poverty

worldwide. MCC will target investment projects in the area of agriculture, education,

private sector development, and capacity building (MCC, 2005). Ambassador Danilovich

has expressed special interest in promoting sustainable development and increased trade

in developing countries

The MCC is more likely to increase its activities in Eastern Europe and the Balkan, Latin

America, Middle East, Africa, and Asia in the programs to reduce poverty through

private sector development. However, most programs will focus on promotion of liberal

democracy and market reform. In the near future, special consideration will be given

countries like Afghanistan and Iraq where the U.S. government is involved in national

building effort. (Washington Post, 2005).

I expect the activity level of MCC to reduce by 5% during Mr. Danilovich tenure. This

can be attributed to U.S congress fatigue in allocation of international aid. These

programs require extensive amount of financial and human resources to be fully

implemented.

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Online Sources:

http://www.adti.net/imf/rato.ontarget.html

http://news.bbc.co.uk/1/hi/business/4396107.stm

http://www.federalreserve.gov/boarddocs/speeches/2002/20021121/default.htm

http://www.federalreserve.gov/boarddocs/speeches/2005/20050414/default.htm

http://www.iadb.org/idbamerica/

http://www.iadb.org/aboutus/index.cfm?language=english

http://www.iadb.org/aboutus/II/programs.cfm?language=English

http://www.imf.org/external/np/sec/pr/2005/pdf/pr05263b.pdf

http://www.imf.org/external/np/tr/2004/tr040622.htm

http://www.mca.gov/countries/candidate/FY05_candidate_report.pdf

http://www.mca.gov/about_us/overview/index.shtml

http://www.washingtonpost.com/wp-dyn/content/article/2005/07/27/AR2005072702578.html

http://www.washingtonpost.com/wp-dyn/content/article/2005/11/16/AR2005111602274.html

http://www.washingtonpost.com/wp-dyn/content/article/2005/10/26/AR2005102602255.html

http://web.worldbank.org/WBSITE/EXTERNAL/EXTABOUTUS/0,,contentMDK:20040565~menuPK:1696892~pagePK:51123644~piPK:329829~theSitePK:29708,00.html

http://web.worldbank.org/WBSITE/EXTERNAL/EXTABOUTUS/ORGANIZATION/EXTOFFICEPRESIDENT/0,,contentMDK:20519590~menuPK:51175739~pagePK:51174171~piPK:64258873~theSitePK:1014541,00.html

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