Abstract

The article analyzes the process that led the IMF to adopt the policy that expanded its powers to the liberalization of capital flows in 1997 and the process that led to the unravelling of such a policy in 1998. The article pursues a twofold objective. First, it aims at uncovering the causal processes that constituted the drivers of policy change. Second, it aims at identifying the factors that impeded the process of policy change. The drivers behind the attempted policy change can be found in IMF staff's capacity to create policy images, maintain policy monopolies, and use ambiguity to foster consensus among member states. Policy change failed because of changes in the policy subsystem.