tim5400
07-13-2010, 06:51 AM
July 13, 2010
Asia must brace for surge of capital, IMF chief warns
Strauss-Kahn for more domestic consumption
Daejeon, South Korea: Asian nations need to be prepared for potential shocks, including a surge in capital inflows, even as the region demonstrates resilience to Europe's fiscal woes, the head of the International Monetary Fund (IMF) said.
Excessive capital movement "creates instability," IMF managing director Dominique Strauss-Kahn said at the Asia 21 high-level conference in the South Korean city of Daejeon.
"Policy makers need to cope through different tools, including revaluation of the currency, accumulation of reserves, prudential rules, and if necessary as we've seen on a temporary basis, capital control was absolutely needed."
Asian economies have led the global economy, sparking the risk of a flood of capital that could push up asset prices and regulators from South Korea to Indonesia have taken measures to head off currency volatility. The region should boost domestic consumption and investment to sustain growth, Strauss-Kahn said.
Global growth
The IMF last week projected Asia would expand 7.75 per cent this year, compared with global growth of 4.6 per cent. The Washington-based fund also warned that financial-market turmoil has increased risks to the world's recovery.
Strauss-Kahn said today the IMF and South Korea are working on crisis-prevention tools for an effective global financial safety net to support Asian and other emerging economies vulnerable to external shocks. In an interview, he declined to comment on the specifics of the plans as the discussions have yet to conclude.
gulf times
Asia must brace for surge of capital, IMF chief warns
Strauss-Kahn for more domestic consumption
Daejeon, South Korea: Asian nations need to be prepared for potential shocks, including a surge in capital inflows, even as the region demonstrates resilience to Europe's fiscal woes, the head of the International Monetary Fund (IMF) said.
Excessive capital movement "creates instability," IMF managing director Dominique Strauss-Kahn said at the Asia 21 high-level conference in the South Korean city of Daejeon.
"Policy makers need to cope through different tools, including revaluation of the currency, accumulation of reserves, prudential rules, and if necessary as we've seen on a temporary basis, capital control was absolutely needed."
Asian economies have led the global economy, sparking the risk of a flood of capital that could push up asset prices and regulators from South Korea to Indonesia have taken measures to head off currency volatility. The region should boost domestic consumption and investment to sustain growth, Strauss-Kahn said.
Global growth
The IMF last week projected Asia would expand 7.75 per cent this year, compared with global growth of 4.6 per cent. The Washington-based fund also warned that financial-market turmoil has increased risks to the world's recovery.
Strauss-Kahn said today the IMF and South Korea are working on crisis-prevention tools for an effective global financial safety net to support Asian and other emerging economies vulnerable to external shocks. In an interview, he declined to comment on the specifics of the plans as the discussions have yet to conclude.
gulf times