WASHINGTON — The International Monetary Fund wants new authority to supervise the global financial system, IMF chief Dominique Strauss-Kahn said Friday.
Strauss-Kahn, in a speech in Washington, said the IMF needed to update its mandate as the global economy emerges from the worst recession in decades.
"We must build on this positive momentum: to transform the Fund into an institution even better equipped to meet the challenges of the post-crisis era," the IMF managing director told a meeting of the Bretton Woods Committee.
"There may be a need for a clearer mandate to pursue risks to global economic and -- I stress -- financial stability," he said, according to the prepared text.
"In particular, we are floating the idea of a new multilateral surveillance procedure. This would allow -- indeed require -- the Fund to assess the broader and systemic effects of country-level policies, and the associated risks, in a fundamentally different way."
The 186-nation IMF currently is responsible for economic surveillance country by country, as well as developments for developments relating to the global economy as a whole, he said, "but in practice, the bulk of our efforts have been at the country level."
"One result of this has been that we have not paid enough attention to the linkages and spillovers between economies -- including those that transmit through the arteries of the global financial system."
The IMF chief also called for improved emergency response authority to financial crises.
He recalled that in the global economic crisis, key emerging market economies seeking financial lifelines had not turned to the Fund as the "first responder," but instead approached the US Federal Reserve and other central banks.
"But what assurances do we have that they would be willing and able to provide such liquidity support in the future? We should not take this support for granted," he said.
"For this reason, it is critical that a multilateral institution be ready to answer the call. In this context, we are currently exploring various options -- including for short-term, multi-country credit lines that the Fund might extend in a systemic crisis."
He said an increase of more than 850 billion dollars to the Fund's resources over the past year "should be sufficient to meet demand in the coming period."
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