Obituaries have been written for the World Bank following the arrival of China’s Asian Infrastructure Investment Bank (AIIB), the implied question being whether the US remains willing and able to lead the global economic governance system. Yet the other Washington-based Bretton Woods institution, the International Monetary Fund, reveals a different story. It appears to be on the verge of a third epoch in which it is set to become indispensable, ushering in the global economic reforms now considered necessary in the ‘new mediocre’.

Attention has focused on whether the Bretton Woods institutions and US global leadership are in decline. The World Bank’s risk of irrelevance, which the FT warned of in an editorial, has been heightened since the AIIB attracted some of Washington’sstaunchest allies. But this has masked an equally profound evolution occurring next door. The IMF has emerged strengthened from the global financial crisis, and the AIIB debate has obscured the Fund’s ambition to be the standard-bearer of a ‘new multilateralism’.

Larry Summers makes a typical case for the consequences of the dysfunctional US governance elite’s failure to incorporate China’s growing economic relevance by linking the AIIB to IMF reform deadlock. The World Bank is tethered by “pervasive restrictions on infrastructure projects”, unlike its new rivals. More fundamentally, the Republican-led Congress persists in blocking already-agreed IMF governance reforms which would “come closer to giving countries such as China and India a share of IMF votes commensurate with their new economic heft”. But this fin de siècle posture is overdone.