The International Monetary Fund (IMF) seeks greater powers to oversee the international financial system and a more significant role in providing emergency financial assistance, said the head of the institution, Dominique Strauss-Kahn.
The IMF aims to enhance mechanisms for timely detection of potentially dangerous systemic risks and ensure a rapid response to liquidity problems, Strauss-Kahn stated at the end of last week in a speech at the Bretton Woods Committee’s intellectual services institute."It may be necessary to tighten the control of risks that threaten global economic and – I emphasize – financial stability," he said. "The Fund has demonstrated its worth to the world during the current crisis." He further warned that it is essential to seize this moment as the world gradually emerges from the most severe financial crisis since the Great Depression to transform the IMF into an institution better equipped to address the challenges arising in the post-crisis period.
Currently, the IMF bases its operations on the needs of individual countries, which is insufficient to avoid, or even mitigate, a potentially greater crisis in the future."We have proposed the idea of developing a new multilateral oversight procedure that would require the Fund to conduct a broader assessment of the impact of government measures on the entire financial system as well as the associated risks, and to do so in a completely different way," Strauss-Kahn said. The IMF’s role as a guardian of systemic stability should also be supported by expanded financial capacities. Over the past year, thanks to loans from member countries, the IMF has tripled its lending capacity to $850 billion. "Such increased financial resources should be sufficient to meet demand in the period ahead," Strauss-Kahn stated. (H)
