Posted: January 9, 2011
Board of Executive Directors at the IMF advised to raise the prices of exchange and the increase in foreign reserve
Council discussed the Executive Directors of the Fund International Monetary ways to reduce the volatility of capital flows across borders, and enhance their role in supporting economic growth and stability and the protection of the financial system, but differing views and attitudes of the case without reaching an agreement that allows change the terms of agreement Bretton Woods, who founded the IMF and World Bank international law, including allowing the establishment of an international legal framework to address the issues associated with the movement of so-called hot money capital.
Did not disclose the Board of Directors unveiled the nature of the differences, but only the reference in the statement that some managers indicated a willingness to discuss the amendment of the Agreement Constitution, while I felt the majority was that it was premature to begin discussions on the issue, before subjecting capital flows for further analysis, and study the practical experiences Member States.
According to the statement that the managers (from what appears to be few enthusiastic to the question of establishing a legal framework), they noted that volatile capital flows have played a major role in the global financial crisis, both increase the vulnerabilities and shocks to be transmitted across the border, arguing that these flows are lacking governed by the international road map, like the international rules governing trade in goods and services, as well as the international monetary arrangements ».
The Directors agreed on the need to strengthen the IMF’s role in matters relating to capital flows, on the basis of the responsibility entrusted to him on the stability of the financial system.
The decision to implement the plan of the Board of Governors, the highest authority in the Fund, adopted at its annual meeting in October (October) the past, and sentenced to «deepen» Role of IDA in the affairs of exchange rates and capital flows, which they considered of «vital to the functioning of the economy and the stability of the system Cash global ».
Spokeswoman Monetary Fund Caroline Atkinson in a press conference, that the Fund is working on an extensive analysis of capital flows and their engines and the experiences of Member States, noting that a preliminary study presented by the Foundation to the meeting of Board of Directors, which included a package of measures which States, especially emerging economies, which have made it a revival of their economies and high yielding investment, compared with developed countries more attractive for foreign investments, applied to reduce the dangers of these flows.
Among the key actions in the package reduce the risks available to emerging economies, the target levels of huge flows of capital seeking high returns, highlighted Atkinson increase reserves states of hard currencies, and allow their currencies to the national high exchange rates, in addition to procedures secondary aims to strengthen the capacity of financial sectors Banking and resistant to shocks, such as a precautionary measure, which resorted to Brazil last week, it ordered the banks to raise levels of reserves.
And according to recent estimates by the institutions concerned with the affairs of the emerging economies, the private investment that flowed to emerging markets Chairperson last year, exceeded most forecasts as Nahzat 820 billion dollars, registering an increase Tnov 40 percent, compared to 2009.
And are expected to maintain these capital flows, which are direct investments in stocks of productive projects about 40 percent of the total volume, to maintain the level if not a slight increase this year.
The share of five emerging economies of the Arab president, Saudi Arabia, UAE, Egypt, Morocco and Lebanon in 2010 about $ 60 billion, double the level recorded in 2009.
Attracted oil and gas projects in Saudi Arabia and the UAE the bulk of direct investment, while financial markets regained some of the Arab, especially Egypt, the attractiveness of investments in shares.
However, the Fund has published several reports which confirmed that the fight against the repercussions of the global economic recession through the programs of investment and government spending and support the capacity of financial and banking sectors to resist shocks, sapped the energy savings for many emerging economies.
A report, foreign currency reserves of the fund, which he published last week, the emerging economies strengthen reserves resumed strongly in the second half of 2010, but at a slower pace than the previous year.
In the first nine months of 2010, the balance of emerging economies rose by 7.8 percent to 5.9 trillion dollars, while the reserve that used by States in the form of the Chairman of the financing of imports, rose 10 percent in the same period of 2009, to 5.17 trillion dollars.
But the accumulation of reserves of hard currency is in itself a strong indication that the emerging economies, especially China, which is unique to about 45 percent of the balance of these economies (2.65 trillion U.S. dollars), is not enthusiastic about the item relating to raising the exchange rates of their national currencies of the package of measures which it deems Fund «appropriate» to combat the threat of capital flows.
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