Business | Banking
IMF says US rejected its banking supervision
The International Monetary Fund should not be blamed for missing warning signs of the financial crisis because the US rejected a banking regulatory and oversight method the Fund had suggested, IMF chief Domin-ique Strauss-Kahn said on Thursday.
- Reuters
- Published: 00:38 April 12, 2008
Washington: The International Monetary Fund should not be blamed for missing warning signs of the financial crisis because the US rejected a banking regulatory and oversight method the Fund had suggested, IMF chief Domin-ique Strauss-Kahn said on Thursday.
Strauss-Kahn said most European countries had adopted measures spelled out in the Financial Sector Assessment Programme (FSAP), which was introduced in 1999 as a means to promote sound financial systems. The FSAP requires that a team of experts perform detailed assessments of the financial sector.
Blame
"What is interesting is that until a few weeks ago, the United States had refused to have an FSAP," he said. "We can't be [held] responsible for lack of supervision ... owing to the fact that our main instrument to make that kind of supervision was not used in this country."
Strauss-Kahn was responding to a question on whether the Fund could lead the way out of the current crisis when its record at predicting and preventing it was mixed at best.
"The IMF has done extensive analysis of the US financial system and regulations," a US Treasury spokesman said.
"An FSAP is not the only vehicle for doing this," he added. According to an August 2007 IMF document on the US economy, the Treasury agreed to start an FSAP in late 2009.
IMF officials said last week they were "humbled" by their failures in raising the alarm about financial market strains that exploded in August, triggering a credit contraction that has slowed global economic growth.
Strauss-Kahn said world central banks, including the US Federal Reserve and European Central Bank, had performed "very well" in their handling of the crisis.
However, he said adopting more standardised ways of intervention would help markets clearly understand policy-makers' intentions.
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