IMF prepares for GFC Mark II
(20 January 2012 – Global) The International Monetary Fund (IMF) will seek up to US$500 billion (A$480 billion) in new financial firepower so it has the resources to be the planet’s last-resort lender.
Several European countries are on the brink of recession and Greece on the brink of default and the IMF has warned the next downturn would be worse than the 2008 GFC.
The IMF said the US$500 billion includes the recent European commitment to add about US$200 billion to its resources.
'At this preliminary stage, we are exploring options on funding and will have no further comment until the necessary consultations with the Fund's membership have been completed,' the 187-nation institution said.
The United States, the biggest stakeholder in the IMF, reiterated that it would not ask Congress to boost the IMF's war chest.
'We continue to believe that the IMF can play an important role in Europe, but only as a supplement to Europe's own efforts,' Treasury spokeswoman Kara Alaimo said in an email to AFP.
'Europe has the capacity to solve its problems. The IMF cannot substitute for a robust euro area firewall,' she said.
'We have told our international partners that we have no intention to seek additional resources for the IMF.'
The IMF funding statement followed an executive board meeting Tuesday to discuss the adequacy of its resources -- currently about US$385 billion in available funds.
IMF managing director Christine Lagarde said Tuesday that the discussion was held at the request of the membership and the 'general support' of the Group of 20 major economies.
Lagarde said the board had recognized the importance of making sure the Fund had enough resources 'to help defuse the current global economic weaknesses and regional challenges.'
'The biggest challenge is to respond to the crisis in an adequate manner and many executive directors stressed the necessity and urgency of collective efforts to contain the debt crisis in the euro area and protect economies around the world from spillovers,' she said.
The IMF said the US$500 billion includes the recent European commitment to add about US$200 billion to its resources.
'At this preliminary stage, we are exploring options on funding and will have no further comment until the necessary consultations with the Fund's membership have been completed,' the 187-nation institution said.
The United States, the biggest stakeholder in the IMF, reiterated that it would not ask Congress to boost the IMF's war chest.
'We continue to believe that the IMF can play an important role in Europe, but only as a supplement to Europe's own efforts,' Treasury spokeswoman Kara Alaimo said in an email to AFP.
'Europe has the capacity to solve its problems. The IMF cannot substitute for a robust euro area firewall,' she said.
'We have told our international partners that we have no intention to seek additional resources for the IMF.'
The IMF funding statement followed an executive board meeting Tuesday to discuss the adequacy of its resources -- currently about US$385 billion in available funds.
IMF managing director Christine Lagarde said Tuesday that the discussion was held at the request of the membership and the 'general support' of the Group of 20 major economies.
Lagarde said the board had recognized the importance of making sure the Fund had enough resources 'to help defuse the current global economic weaknesses and regional challenges.'
'The biggest challenge is to respond to the crisis in an adequate manner and many executive directors stressed the necessity and urgency of collective efforts to contain the debt crisis in the euro area and protect economies around the world from spillovers,' she said.
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