Tweet
http://www.businesstimes.com.sg/sub/...355500,00.html
Published October 21, 2009
Published October 21, 2009
The International Monetary Fund is considering creating a new programme to discourage member countries from building up currency reserves, John Lipsky, the IMF's first deputy managing director, said on Monday.
'We are exploring the possibility of improving our existing facilities or adding other insurance-like facilities that would give our members greater confidence that they don't need to self insure by building up reserves,' Mr Lipsky told reporters at a conference in Mexico.
Some economists see the massive accumulation of currency reserves by exporters like China as one of the causes of the global financial crisis.
The reserves were often reinvested in US dollar assets, which helped keep US interest rates low and, along with weak lending oversight, fuelled the US housing bubble.
Earlier this month, the IMF called upon the Fund's member nations to increase the amount of capital it can deploy in times of crisis by perhaps US$1 trillion or more.
The IMF wants to dissuade countries like China from building big currency war chests by convincing them that the IMF could come to their aid in times of need.
In separate comments, Mr Lipsky warned countries not to scale back stimulus measures used to fight the global recession, saying that that could jeopardise a return to weak growth next year.
'This is no time to take risks with premature withdrawal of the stimulus,' said Mr Lipsky, who is the IMF's No 2 official.
cont.
'We are exploring the possibility of improving our existing facilities or adding other insurance-like facilities that would give our members greater confidence that they don't need to self insure by building up reserves,' Mr Lipsky told reporters at a conference in Mexico.
Some economists see the massive accumulation of currency reserves by exporters like China as one of the causes of the global financial crisis.
The reserves were often reinvested in US dollar assets, which helped keep US interest rates low and, along with weak lending oversight, fuelled the US housing bubble.
Earlier this month, the IMF called upon the Fund's member nations to increase the amount of capital it can deploy in times of crisis by perhaps US$1 trillion or more.
The IMF wants to dissuade countries like China from building big currency war chests by convincing them that the IMF could come to their aid in times of need.
In separate comments, Mr Lipsky warned countries not to scale back stimulus measures used to fight the global recession, saying that that could jeopardise a return to weak growth next year.
'This is no time to take risks with premature withdrawal of the stimulus,' said Mr Lipsky, who is the IMF's No 2 official.
cont.
Comment