The International Monetary Fund should be transformed into a global central bank to help prevent new financial crises from wrecking economies around the world, American financier George Soros said Monday in the London-based Financial Times. ``Markets can move like a wrecking ball, knocking over one economy after another,'' Soros said in an op-ed article. ``The swings cannot be avoided altogether, but they need to be brought under control.''
Changes to the IMF were necessary because it had become ``part of the problem rather than the solution.'' But he strongly disagreed with those calling for the IMF's abolition. ``If global financial markets are inherently unstable we need a stronger regulatory framework rather than the dismantling of existing institutions,'' Soros wrote. ``To be specific, we need to convert the IMF into something resembling an international central bank.''
Soros said the IMF should act as lender of last resort, and only for ``a select group of countries that are eager to obtain such protection.'' In return, the countries would have to maintain sound economic and banking policies. Countries which failed to meet those conditions would continue to have access to the IMF on terms similar to those which currently are available. But in a crisis, the IMF would be allowed to impose conditions not only on the country involved but also on the creditors. Soros said that would eliminate the ``current imbalance in favor of creditors.''
One of the major criticisms of the billion-dollar IMF rescue packages for Asia and Russia in the past year was that much of the money went to bail out international bankers who made bad investments. Soros, chairman of Soros Fund Management, runs the $20 billion Quantum group of hedge funds, which were rattled by the turbulent global economy last year.
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