In a message dated 9/17/99 2:25:53 PM Central Daylight Time, AOL News writes: << Subj: Panel Recommends Help for IMF Date: 9/17/99 2:25:53 PM Central Daylight Time From: AOL News BCC: Ahab42 Panel Recommends Help for IMF .c The Associated Press By HARRY DUNPHY WASHINGTON (AP) - To prevent future international financial crises, a high-level task force recommended Friday that commercial banks and wealthy investors play a bigger role in bailing out troubled national economies. The panel, sponsored by the Council on Foreign Relations, also suggested that the International Monetary Fund return to a previous policy of providing smaller rescue packages. And it urged countries trying to develop market economies to avoid fixed currency exchange rates and to control short-term capital inflows. ``The task force believes that the primary responsibility for crisis prevention and management in emerging economies should be placed on the economies themselves and on the private lenders and investors that dominate today's international capital markets,'' the report said. One reason it was so difficult to get Congress to approve an $18 billion increase in IMF financing last year, the report said, ``was the perception that Wall Street - and particularly large banks - was benefiting much more from (IMF-led) rescue packages than was Main Street.'' These issues are expected to be at the center the annual meetings of the IMF and its sister institution, the World Bank, starting next week in Washington. The report said both organizations need to refocus on areas they are best equipped to deal with instead of expanding into the other's territory. Responding to a request from President Clinton last year, the New York-based Council on Foreign Relations put together an independent group to study changing the international financial system in light of global financial crises that began in mid-1997. Other nations and the IMF committed $190 billion to help bail out Thailand, Indonesia, South Korea, Russia and Brazil. One-third of the money has been disbursed so far. Former Commerce Secretary Peter Peterson and Carla Hills, former U.S. Trade Representative, chaired the 29-person panel. It included economists, business leaders, labor union representatives, former government officials and lawmakers. Project director Morris Goldstein, an economist at the International Institute of Economics and a former IMF official, said real headway can be made in dealing with financial crises only by putting responsibility on the main participants, the emerging-market countries and their creditors. ``You need to change the behavior of borrowers and private creditors, and to do that you have to alter the incentives they have to manage risk better,'' Goldstein said. ``One of the advantages of smaller (IMF) financial rescue packages is that over time they should convince borrowers and creditors they are on their own if they overborrow and overlend, and this will make them more careful in the future,'' he said. The report says that in recent years the balance has tilted too far away from market discipline. ``Unless balance is restored, we will not be successful either in deterring future crises or in garnering support for official rescue packages,'' the report said. The Institute for International Finance, which represents major international banks and financial institutions, recommended a voluntary, case-by-case approach for its members. Compelling them to take losses, the institute said Thursday, would ``make bad situations worse. (PROFILE (CO:International Finance Corp; TS:ACW;) AP-NY-09-17-99 1524EDT Copyright 1999 The Associated Press. The information contained in the AP news report may not be published, broadcast, rewritten or otherwise distributed without prior written authority of The Associated Press. Announcement: America Online has added Reuters newswires to News Profiles. To add Reuters articles to your daily news delivery, go to KW: <A HREF="aol://5862:146">News Profiles</A> and click on "Modify Your News Profiles." Then click "Edit" and add Reuters from the list on the left. To edit your profile, go to keyword <A HREF="aol://1722:NewsProfiles">NewsProfiles</A>. For all of today's news, go to keyword <A HREF="aol://1722:News">News</A>. >>
Panel Recommends Help for IMF .c The Associated Press By HARRY DUNPHY WASHINGTON (AP) - To prevent future international financial crises, a high-level task force recommended Friday that commercial banks and wealthy investors play a bigger role in bailing out troubled national economies. The panel, sponsored by the Council on Foreign Relations, also suggested that the International Monetary Fund return to a previous policy of providing smaller rescue packages. And it urged countries trying to develop market economies to avoid fixed currency exchange rates and to control short-term capital inflows. ``The task force believes that the primary responsibility for crisis prevention and management in emerging economies should be placed on the economies themselves and on the private lenders and investors that dominate today's international capital markets,'' the report said. One reason it was so difficult to get Congress to approve an $18 billion increase in IMF financing last year, the report said, ``was the perception that Wall Street - and particularly large banks - was benefiting much more from (IMF-led) rescue packages than was Main Street.'' These issues are expected to be at the center the annual meetings of the IMF and its sister institution, the World Bank, starting next week in Washington. The report said both organizations need to refocus on areas they are best equipped to deal with instead of expanding into the other's territory. Responding to a request from President Clinton last year, the New York-based Council on Foreign Relations put together an independent group to study changing the international financial system in light of global financial crises that began in mid-1997. Other nations and the IMF committed $190 billion to help bail out Thailand, Indonesia, South Korea, Russia and Brazil. One-third of the money has been disbursed so far. Former Commerce Secretary Peter Peterson and Carla Hills, former U.S. Trade Representative, chaired the 29-person panel. It included economists, business leaders, labor union representatives, former government officials and lawmakers. Project director Morris Goldstein, an economist at the International Institute of Economics and a former IMF official, said real headway can be made in dealing with financial crises only by putting responsibility on the main participants, the emerging-market countries and their creditors. ``You need to change the behavior of borrowers and private creditors, and to do that you have to alter the incentives they have to manage risk better,'' Goldstein said. ``One of the advantages of smaller (IMF) financial rescue packages is that over time they should convince borrowers and creditors they are on their own if they overborrow and overlend, and this will make them more careful in the future,'' he said. The report says that in recent years the balance has tilted too far away from market discipline. ``Unless balance is restored, we will not be successful either in deterring future crises or in garnering support for official rescue packages,'' the report said. The Institute for International Finance, which represents major international banks and financial institutions, recommended a voluntary, case-by-case approach for its members. Compelling them to take losses, the institute said Thursday, would ``make bad situations worse. (PROFILE (CO:International Finance Corp; TS:ACW;) AP-NY-09-17-99 1524EDT Copyright 1999 The Associated Press. The information contained in the AP news report may not be published, broadcast, rewritten or otherwise distributed without prior written authority of The Associated Press. Announcement: America Online has added Reuters newswires to News Profiles. To add Reuters articles to your daily news delivery, go to KW: <A HREF="aol://5862:146">News Profiles</A> and click on "Modify Your News Profiles." Then click "Edit" and add Reuters from the list on the left. To edit your profile, go to keyword <A HREF="aol://1722:NewsProfiles">NewsProfiles</A>. For all of today's news, go to keyword <A HREF="aol://1722:News">News</A>.
