In addition, the IMF is warming up to the view that, in order to fend off these problems, it may well be advisable to use counter-cyclical capital account regulations, as Brazil and South Korea have begun to do. The use of such regulations flies in the face of the old IMF orthodoxy. At the behest of the US Treasury, especially under secretaries of Treasury Robert Rubin and Larry Summers during Bill Clinton's presidency, it preached the "gospel" of unfettered capital market liberalization to the newly emerging economies.

What shines through all these technical-sounding arguments is that the burdens of adjustment are no longer automatically imposed on the recipient countries in the South. The countries in the North, mainly the US, may need to regulate the outflow of capital from their shores.

Powerful new voices, such as Singapore's long-time Finance Minister Tharman Shanmugaratnam, who serves as the chairman of the IMF's key Policy Steering Committee, and his Brazilian counterpart Guido Mantega have seen to it that the notion of "global governance" finally gets some real-life meaning.

Global governance reform is about much more than changing voting rights in the IMF's and the World Bank's boards. It concerns a very hands-on process to ensure a fair and equitable share of the burdens of adjustment in the global economy and finance.

The success of this campaign owes much to the fact that the richer countries from the South now act very much as global lenders, too. As a result, it can no longer be said that a bigger role for the emerging market economies would mean putting the borrowers in charge of an institution that ought to be rightfully controlled by the lenders.

The world at large has reason to rejoice in the fact that the IMF is taking off its self-imposed ideological blinders. If the current trend of change continues, and all indications are that it will, it would represent a big step forward for better global governance.

That this is happening in the field of global finance makes it that much more meaningful. It is a key step in reining in an industry that has completely lost its focus on serving the real, not the surreal, economy and whose machinations have proven to have effects similar to nuclear radiation.

The author is the publisher of The Globalist, president of The Globalist Research Center and a former consultant to the IMF.

(China Daily 01/04/2013 page9)