IMF chief says institute could be industry watchdog

Business Materials 28 September 2008 14:46 (UTC +04:00)

International Monetary Fund (IMF) chief Dominique Strauss-Kahn said Sunday that his institute could serve as a kind of watchdog for the crisis-stricken world financial market, reported dpa.

In remarks published in the Sunday paper Le Journal du Dimanche, Strauss-Kahn said the IMF could set the norms and keep watch on the markets.

Democracy demanded that each country must pass its own laws, he said, "but the general rules must apply universally because the financial system has been globalized."

Speaking of the IMF, Strauss-Kahn said: "We are in a position to define and to guarantee compromise and the common interest."

Strauss-Kahn said governments had been ignoring the IMF's warnings. Now, after long resistance to the idea, even the United States and China were ready to accept the IMF's financial stability assessments.

"This is a signal," the IMF chief said, recalling the history of the institute was set up in 1944 "as a kind of worldwide public service" aimed at ending anarchy on world currency markets.

"Today we must additionally stop the finance market anarchy: The lack of transparency, greed and irresponsbility of a system which has lost touch with the real economy," Strauss-Kahn said.

The real economy, he said, will not collapse over the banking crisis. "The central banks will succeed in mastering the financial crisis," the former French economics and finance minister said.

The 700-billion-dollar emergency plan in the United States was correct, but could only be "the first act." What must follow is regulation of the system to prevent a repetition of such crises.

Strauss-Kahn added that the issue of executives' salaries was not a peripheral question.

"Whoever controls the profits of financiers also is in control of the financial system," the IMF chief said. This was not a moral issue, but an ideological one.