US financier George Soros called Monday for the IMF to be turned into an international central bank to prevent financial crises, in an article for Britain's Financial Times.
He said the International Monetary Fund (IMF) had been part of the problem in recent crises rather than the solution because of "punitive" conditions it imposed on debtor countries. The answer, he wrote, was that "we need to convert the IMF into something resembling an international central bank." "I am talking about empowering the IMF to act as lender of last resort with regard to a select group of countries that are eager to obtain such protection."
In the past, the IMF imposed "punitively high" interest rates on debtors, while at the same time lenders relied on the organisation to bail them out in case of trouble. Also, the IMF could only intervene in times of difficulty rather than try to prevent a crisis developing, he said.
Under Soros' proposal, the IMF would impose conditions not only on the country concerned but also on creditors, and regulate the environment for international capital flows. "The new arrangement would also eliminate the imbalance between prevention and cure. The emphasis would be on prevention," he added. Institutions such as US the Federal Reserve and new European Central Bank would be represented on the governing body of such an organisation.
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