As Mr Preston started to speak, up jumped a man from the '50 years is long enough' group protesting at the bank's lending activities. This diverted the security guards who bundled him out, leaving the way clear for a woman to rush round behind Mr Preston and hold aloft a banner denouncing the urbane New York banker as a murderer.
This was merely the most dramatic of a series of protests about the two institutions. Yesterday other protesters were unfurling banners in the streets of Madrid denouncing not just the IMF and World Bank but also the General Agreement on Tariffs and Trade (Gatt), the body which oversees international trade and which most people would regard as a good guy on the international institutional front.
Small protest, no one hurt? Well, only up to a point. While some of the protests can be dismissed as fringe activities, the IMF and the World Bank have also been criticised by the churches and by Oxfam. The latter, in particular, reaches well into the mainstream of Western political thought.
Moreover, the banner-unfurlers are only one side of a pincer movement, the other being the people, including many officials in the developed world's finance ministries, who think the two institutions have become fat cats and need to be put on a crash diet. They cite the 2,000-odd 'consultants' the bank employs in addition to its staff, the travel budgets, the corporate grandeur of the head offices and so on.
This year the bank has responded to such criticism by announcing that it is to cut 6 per cent from its costs next year and the same again the year after that. This move will reassure its shareholders, though it raises the inevitable question as to why the bank did not make such cuts earlier.
The IMF, on the other hand, seems to have set itself on something of a collision course with its principal shareholders. The issue is whether the fund's managing director, Michel Camdessus, will accept a plan for redirecting money to the poorer countries by an issue of the fund's 'currency': Special Drawing Rights. This has been suggested by the large industrial countries, including the United States and Britain. The IMF has an alternative and arguably more expensive scheme. Now this sounds like one of those technical debates guaranteed to bore anyone to tears who is not intrigued by the intricacies of international liquidity. But it may well develop into a 'who runs the IMF - the staff or the owners?' dispute.
It is important not to be carried away by international diplomatic rows - which is what we are seeing over the future of the IMF and the World Bank. The arguments are interesting only as symptoms of a wider unease over the institutions' role. That unease has more to do with their increasing irrelevance than with their excessive power. Both bodies are on the wrong end of giant shifts in world finance as important, say, as the shift in the computer industry from the mainframe to the PC.
The IMF was designed to lend to countries which were in short-term balance of payments difficulty to stop them bringing in trade controls or indulging in competitive devaluation. Now, with floating exchange rates, the markets make up their own minds about the appropriate exchange rate and any country which introduces trade controls is likely to find itself severely punished on the exchanges.
Sound countries do not need to borrow to finance their short-term deficits, at least, not from the IMF, leaving the main customers of the fund those countries which may have the greatest difficulty paying back their loans - countries such as Ukraine and Russia. In any case, they do not need short-term money; they need long-term investment.
This ought to come from the World Bank. But the bank has found that many of its traditional customers can obtain money more cheaply from the private sector, leaving it with 'new' countries where the credit risk is inevitably much greater. The effect has been to leave the bank with a portfolio, as bankers would say, of declining quality. This is one of the reasons why the bank needs to slim itself down.
It is easy to see what ought to happen. The IMF ought to be able, at some stage, to go back to its original task of policing the world currency system and not try to do things it was never designed to do. We know floating currencies have serious deficiencies and there is a good case for trying to inject some glue into the exchanges to steady them. As world inflation comes down, returning to the rates of the Sixties, re- establishing some central limits on exchange-rate movements starts to look a reasonable possibility again - certainly more reasonable than at any time for 30 years.
As for the World Bank, it is surely strange that a body designed to help countries become successful market economies should itself be a nationalised industry. And not a nationalised industry owned by one government, which would be bad enough, but one owned by some 170 countries. There is little commercial pressure for either body to hold down costs or provide services the market wants. No wonder it is attacked from every quarter.
Privatising the IMF would be difficult because it is really a co-operative institution, rather like a mutual life assurance society. But large parts of the bank could be hived off to the private sector and the money from the sale given back to the governments who put up the funds in the first place. Few successful banks anywhere in the world are owned by governments.
Will anything like this happen? Not for a while, for there is as yet little political drive for a radical change in the capital structure of these bodies. But once the management of the bank, in particular, starts to realise that its present ownership works to its disadvantage, then change becomes possible. This would alter the whole relationship between the institutions and the world they seek to serve.
Poor Mr Preston was never branded a murderer in all those years he was head of J P Morgan, the successful New York commercial bank.Reuse content