Thank you for that kind introduction. It’s an honor to be here.
In the final months of World War II, Western leaders convened the greatest
economic minds of their generation. Their task? To build a new financial system.
At a quiet resort high up in the mountains of New Hampshire, they laid the
foundation for Pax Americana.
The architects of Bretton Woods recognized that a global economy required global
coordination. To encourage that coordination, they created the IMF and the World
Bank.
These twin institutions were born after a period of intense geopolitical and
economic volatility. The purpose of the IMF and the World Bank was to better
align national interests with international order, thereby bringing stability to
an unstable world.
In short, their purpose was to restore and preserve balance.
This remains the purpose of the Bretton Woods institutions. Yet everywhere we
look across the international economic system today, we see imbalance.
The good news: it doesn’t have to be this way. My goal this morning is to
outline a blueprint to restore equilibrium to the global financial system and
the institutions designed to uphold it.
I have spent the bulk of my career from the outside looking in on financial
policy circles. Now I am on the inside looking out. And I am eager to work with
each of you to restore order to the international system. To achieve this,
however, we must first reconnect the IMF and World Bank with their founding
missions.
The IMF and World Bank have enduring value. But mission creep has knocked these
institutions off course. We must enact key reforms to ensure the Bretton Woods
institutions are serving their stakeholders—not the other way around.
Bringing balance back to global finance will require clear-eyed leadership from
the IMF and World Bank. This morning, I will explain how they can provide that
leadership to build safer, stronger, and more prosperous economies all around
the world. I wish to invite my international counterparts to join us in working
toward these goals.
On this point, I wish to be clear: America First does not mean America alone. To
the contrary, it is a call for deeper collaboration and mutual respect among
trade partners.
Far from stepping back, America First seeks to expand U.S. leadership in
international institutions like the IMF and World Bank. By embracing a stronger
leadership role, America First seeks to restore fairness to the international
economic system.
Global Imbalances and Trade
Nowhere is the imbalance I mentioned earlier more obvious than in the world of
trade. That’s why the United States is taking action now to rebalance global
commerce.
For decades, successive administrations relied on faulty assumptions that our
trading partners would implement policies that would drive a balanced global
economy. Instead, we face the stark reality of large and persistent U.S.
deficits as a result of an unfair trading system.
Intentional policy choices by other countries have hollowed out America’s
manufacturing sector and undermined our critical supply chains, putting our
national and economic security at risk. President Trump has taken strong action
to address these imbalances and the negative impacts they have on Americans.
This status quo of large and persistent imbalances is not sustainable. It is not
sustainable for the United States, and ultimately, it is not sustainable for
other economies.
Now I know “sustainability” is a popular term around here. But I’m not talking
about climate change or carbon footprints. I’m talking about economic and
financial sustainability—the kind of sustainability that raises standards of
living and keeps markets afloat. International financial institutions must be
singularly focused on upholding this kind of sustainability if they are to
succeed in their missions.
In response to President Trump’s tariff announcements, more than 100 countries
have approached us wanting to help rebalance global trade. These countries have
responded openly and positively to the President’s actions to create a more
balanced international system. We are engaged in meaningful discussions and look
forward to talking with others.
China, in particular, is in need of a rebalancing. Recent data shows the Chinese
economy tilting even further away from consumption toward manufacturing. China’s
economic system, with growth driven by manufacturing exports, will continue to
create even more serious imbalances with its trading partners if the status quo
is allowed to continue.
China’s current economic model is built on exporting its way out of its economic
troubles. It’s an unsustainable model that is not only harming China but the
entire world.
China needs to change. The country knows it needs to change. Everyone knows it
needs to change. And we want to help it change—because we need rebalancing too.
China can start by moving its economy away from export overcapacity, and toward
supporting its own consumers and domestic demand. Such a shift would help with
the global rebalancing that the world desperately needs.
Of course, trade is not the only factor in broader global economic imbalances.
The persistent over-reliance on the United States for demand is resulting in an
evermore unbalanced global economy.
Some countries’ policies encourage excess saving, which holds back private
sector-led growth. Others keep wages artificially depressed, which also
suppresses growth. These practices contribute to global dependence on U.S.
demand to spur growth. They also lead to a global economy that is weaker and
more vulnerable than it should be.
In Europe, former ECB President Mario Draghi has identified several sources of
stagnation—and he has outlined several recommendations to get the economy back
on the right track. European countries would do well to take his recommendations
to heart.
Europe has already taken some long overdue initial steps that I applaud. These
steps create a new source of global demand, and also involve Europe stepping up
on the security front. I believe global economic relationships should come to
reflect security partnerships.
Security partners are more likely to have compatible economies structured for
mutually beneficial trade. If the United States continues offering security
guarantees and open markets, then our allies must step up with stronger
commitments to shared defense. The initial actions from Europe on increased
fiscal and defense spending are proof that the Trump Administration’s policies
are working.
U.S. Leadership at the IMF and World Bank
The Trump Administration and U.S. Treasury are committed to maintaining and
expanding U.S. economic leadership in the world. This is especially true at the
international financial institutions.
The IMF and World Bank serve critical roles in the international system. And the
Trump Administration is eager to work with them—so long as they can stay true to
their missions.
But under the status quo, they are falling short.
The Bretton Woods institutions must step back from their sprawling and unfocused
agendas, which have stifled their ability to deliver on their core mandates.
Going forward, the Trump Administration will leverage U.S. leadership and
influence at these institutions and push them to accomplish their important
mandates. The United States will also demand that the management and staff of
these institutions be accountable for demonstrating real progress. I invite all
of you to join us in working to refocus these institutions on their core
missions. It is in our collective interest to do so.
IMF
First, we must make the IMF the IMF again.
The IMF’s mission is to promote international monetary cooperation, facilitate
the balanced growth of international trade, encourage economic growth, and
discourage harmful policies like competitive exchange rate depreciation. These
are crucially important functions to support the U.S. and global economies.
Instead, the IMF has suffered from mission creep. The IMF was once unwavering in
its mission of promoting global monetary cooperation and financial stability.
Now it devotes disproportionate time and resources to work on climate change,
gender, and social issues.
These issues are not the IMF’s mission. And the IMF’s focus in these areas is
crowding out its work on critical macroeconomic issues.
The IMF must be a brutal truth-teller, and not just to some members. Instead,
today’s IMF has been whistling past the graveyard. Its 2024 External Sector
Report was entitled “Imbalances Receding.” This pollyannish outlook is
symptomatic of an institution more dedicated to preserving the status quo than
asking the hard questions.
Here in the United States, we know we need to get our fiscal house in order. The
last administration ran up the largest peacetime deficit in our nation’s
history. The current administration is committed to fixing this. We are open to
critique. But we will not abide the IMF failing to critique the countries that
need it most—principally, surplus countries.
In line with its core mandate, the IMF needs to call out countries like China
that have pursued globally distortive policies and opaque currency practices for
many decades.
I also expect the IMF to call out unsustainable lending practices by certain
creditor countries. The IMF should more proactively push official bilateral
lenders to come to the table early to work with borrower countries to minimize
periods of debt distress.
The IMF must refocus its lending on addressing balance of payments problems. And
its lending should be temporary.
When done responsibly, IMF lending is at the very core of its contribution to
the global economy: when markets fail, the IMF steps in and makes resources
available. In exchange, countries implement economic reforms to resolve their
balance of payments issues and support economic growth. The reforms undertaken
during these programs are some of the IMF’s most important contributions to a
strong, sustainable, and balanced global economy.
Argentina is a fitting example. I was in Argentina earlier this month to
demonstrate the United States’ support for the IMF’s efforts to help the country
reset financially. Argentina deserves the IMF’s support because the country is
making real progress toward meeting financial benchmarks.
But not every country is so deserving. The IMF must hold countries accountable
for implementing economic reforms. And sometimes, the IMF needs to say No. The
organization has no obligation to lend to countries that fail to implement
reforms. Economic stability and growth should be the markers of the IMF’s
success—not how much money the institution lends out.
World Bank
Like the IMF, the World Bank must be made fit for purpose again.
The World Bank Group helps developing countries grow their economies, reduce
poverty, increase private investment, support private-sector job creation, and
reduce dependence on foreign aid. It offers transparent and affordable long-term
financing for countries to invest in their own development priorities.
The Bank, along with the Fund, provides extensive technical support to promote
debt sustainability among low-income countries, which empowers those countries
to stand up to coercive and opaque lending terms from creditors. These core
functions of the World Bank complement the Trump Administration’s efforts to
foster safer, stronger, and more prosperous economies in the United States and
the world.
But the Bank, like the IMF, has strayed in certain respects from its initial
mission.
The Bank should no longer expect blank checks for vapid, buzzword-centric
marketing accompanied by half-hearted commitments to reform. As the Bank returns
to its core mission, it must use its resources as efficiently and effectively as
possible. And it must do so in ways that demonstrate tangible value for all
member countries.
The Bank can use its resources more efficiently now by focusing on increasing
energy access. Business leaders the world over identify unreliable power supply
as one of the primary impediments to investment. The World Bank and African
Development Bank’s joint “Mission 300” initiative to expand energy access to 300
million more people in Africa is a welcome effort. But the World Bank must
respond to countries’ energy priorities and needs and focus on dependable
technologies that can sustain economic growth rather than seek to meet
distortionary climate finance targets.
We applaud the recent announcement that the World Bank will seek to remove
prohibitions on support for nuclear energy, which could revolutionize energy
supply for many emerging markets. We encourage the Bank to go further in giving
countries access to all technologies that can provide affordable baseload
generation.
The World Bank must be tech neutral and prioritize affordability in energy
investment. In most cases, this means investing in gas and other fossil
fuel-based energy production. In other cases, this may mean investing in
renewable energy coupled with systems to help manage the intermittency of wind
and solar.
The history of humanity teaches a simple lesson: Energy abundance sparks
economic abundance. That’s why the Bank should encourage an all-of-the-above
approach to energy development. Such an approach will make World Bank financing
more effective. And it will reconnect the Bank to its core mission of economic
growth and poverty alleviation.
In addition to increasing energy access, the World Bank can use its resources
more effectively by starting to apply its graduation policy. This would allow
the Bank to focus on lending to poorer, less-creditworthy countries. This is
where World Bank support makes the biggest difference for poverty and growth.
Instead, the World Bank continues to lend every year to countries that have met
the criteria to graduate from World Bank borrowing. There is no justification
for this continued lending. It siphons off resources from higher priorities and
crowds out the development of private markets. It also disincentivizes
countries’ efforts to move away from dependency on the World Bank and toward
job-rich, private sector-led growth.
Going forward, the Bank must set firm graduation timelines for countries that
have long since met the graduation criteria. Treating China—the second-largest
economy in the world—as a “developing country” is absurd.
While it has been at the expense of many Western markets, China’s rise has been
rapid and impressive. But if China wants to play a role in the global economy
commensurate with its actual importance, then the country needs to graduate up.
The World Bank should also implement transparent procurement policies based on
best value. It must help countries move away from procurement approaches that
prioritize only the lowest-cost bids.
Such procurement policies reward distortive and subsidized industrial policies
that undermine development. They also stifle the private sector, incentivize
corruption and collusion, and result in greater long-term costs. Procurement
policies based on best value are better from both an efficiency and development
perspective, and their robust implementation will benefit the Bank and its
shareholders.
Related to this subject, I wish to send a strong message about procurement
policies as regards Ukraine: No one who financed or supplied the Russian war
machine will be eligible for funds earmarked for Ukraine’s reconstruction.
Conclusion
To conclude, I invite our allies to work with us as we rebalance the
international financial system and refocus the IMF and World Bank on their
founding charters. America First means we are doubling down on our engagement
with the international economic system, including at the IMF and the World Bank.
A more sustainable international economic system will be one that better serves
the interests of the United States and all other participants in the system. And
we look forward to working with you in this endeavor. Thank you.
