Economist Anna J. Schwartz, of the National Bureau of Economic Research, argues that both institutions should be terminated because they are "wasteful and unnecessary for resolving currency crises."

• Created by Congress in 1934 to help stabilize the exchange rate of the dollar, the ESF has been a "futile exercise" in Schwartz's opinion, since intervention does not deal with the fundamental economic conditions that underlie fluctuations in the relative price of the dollar.

• Over the years, the ESF has gotten into the business of negotiating stabilization loans to favored countries -- even though Congress did not originally authorize it to do so.

• The IMF was created by the Bretton Woods Conference in 1944, but the Bretton Woods system collapsed in 1971 and the IMF has been "seeking to reinvent itself" ever since.

• In pursuing a role as an "international lender of last resort," the IMF finds itself in the role of bailing out bankrupt banks -- rather than protecting sound but illiquid banks.

Source: Anna J. Schwartz, "Time to Terminate the ESF and the IMF," Foreign Policy Briefing No. 48, August 26, 1998, Cato Institute, 1000 Massachusetts Ave., N.W., Washington, D. C. 20001, (202) 842-0200.

For text http://www.cato.org/pubs/fpbriefs/fpb-048.pdf