Friday, October 2, 2009

New Global Monetary System Update

IMF chief renews call for currency reform

Dominique Strauss-Kahn, the head of the International Monetary Fund, on Friday reiterated his criticism of China’s “undervalued” currency, but said reforms to exchange rate policies were part of wider moves to create more balanced global growth.

Speaking at the opening of the World Bank and IMF annual meetings in Istanbul, Mr Strauss-Kahn and Robert Zoellick, the bank’s president, called for the world to continue co-operating on international economic issues even as the economic and financial crisis fades...

...This build up of reserves, Mr Strauss-Kahn said, should be replaced in future by a “less costly and more efficient pooling of reserves” at the IMF. He said the decision in principle to shift 5 per cent of the votes in the IMF from richer countries to poorer ones was “key” to making the fund more credible and legitimate.

Mr Zoellick also called for a shift in world demand. “A multi-polar economy, less reliant on the US consumer, will be a more stable economy,” he said.