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IMF: Financial Sector Reform Focus Needed

by Amanda Banks, Tax-News.com, London

23 April 2010


Speaking ahead of the International Monetary Fund (IMF), the World Bank, and G20 countries' forthcoming meetings to be held in Washington, IMF Managing Director, Dominique Strauss-Kahn, warned that despite the return to growth, world economies must not adopt the perception that it is business as usual.

Strauss-Kahn said the faster-than-expected recovery was testament to the unprecedented cooperation between major economies to tackle the crisis, but warned that governments should now focus on redoubling efforts to reform financial sector regulation to avoid future crises.

“I don’t like that many people have in mind that the crisis is over, that everything is behind us, and we can go back to business as usual,” he said, adding: “The goal now is to secure and advance the recovery, because even if the recovery is stronger and faster than expected, it’s still fragile.”

Strauss-Kahn observed a variety of problems that the global economy continues to face, including high unemployment in advanced economies, weak private demand, high government debt, and the risk of asset price bubbles in emerging markets.

G20 leaders are to discuss on April 23 a process of mutual assessment of each other’s economies to mitigate risks to the recovery from inequalities in countries’ policy responses. “Multilateralism and policy cooperation is obviously the great legacy of this crisis, and our point is that it has to be maintained in a postcrisis world,” Strauss-Kahn said.

On financial sector reform, he stressed that governments needed now to refocus efforts towards three areas, to establish international agreements by the end of the year:

  • Rules on financial sector liquidity and capital;
  • A toolkit for addressing systemic risks; and
  • A framework for cross-border resolution issues.

He said he hoped that world leaders would be able to make progress together on pushing ahead with financial market regulation and iron out inconsistencies in approach. Concluding, Strauss-Kahn said that countries do not need to adopt exactly the same rules, but they need to be consistent around the world.

TAGS: economics | business | law | banking | financial services | capital markets | International Monetary Fund (IMF) | unemployment | G20 | regulation | services

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