PARIS: IMF head Dominique Strauss-Kahn said Thursday he was more optimistic about the global financial crisis now that some calm is returning to markets after action to halt the slide by US and European governments.
If the extreme volatility of the markets shows that the financial crisis continues to have an impact … I hope very much that this volatility will calm because the US and European (stability) programs are solid, Strauss-Kahn told Le Monde daily on Thursday.
They just need a little time to get going full speed, he added.
The IMF managing director has previously warned of the possible adverse impact the financial crisis will have on the developing world and repeated that he remained pre-occupied by this issue.
I have been insistent in saying that there is another crisis behind the financial crisis -that in the poorer countries, hit full-on by the rise in food in raw material prices, he said.
In developed countries, the crisis means a fall in purchasing power. In the weakest (countries), it means the risk of famine for some, malnutrition for many and consequences for a whole generation.
Strauss-Kahn also said that he would propose five avenues to reform the global financial system, with the IMF reasserting a regulating role, when the G20 countries meet in two weeks time in Washington on the crisis.
He said he expected the meeting of Group of 20 leading economic countries on Nov. 15 to take full account of the historic situation we are living through.
The meeting should therefore give a decisive impulse on the basis of the document which we will submit on the lessons of the crisis, for reform of world governance.
The IMF s role as coordinator of global regulation must be reaffirmed, he told the newspaper, adding that such a move had been advocated by French President Nicholas Sarkozy.
I will therefore propose to the G20 a new governance plan … a global regulation strategy based on five approaches, he said.
The IMF must develop a new loan able to deal with short-term liquidity problems which certain economies are confronting.
He said IMF resources had to be boosted, as has been urged by British Prime Minister Gordon Brown. In addition, lessons must be drawn from economic policies which have produced these repeated bubbles that destroy the real economy when they burst.
Strauss-Kahn also said it would be necessary to monitor the implementation of new financial regulations drafted – along with the IMF – by the Financial Stability Forum, which groups the major central banks.
A world system must be envisaged that is more coherent because it is simpler and more efficient because it is more coordinated, he told Le Monde.
In addition to its role as fireman and mason, the IMF can – for a while – have an architect s role. -AFP
