- The Washington Times - Thursday, May 18, 2006


The International Monetary Fund said yesterday it had appointed a panel of financial heavyweights, including former Federal Reserve Chairman Alan Greenspan, to come up with ideas to avert a cash crisis for the global lender.

The committee will include European Central Bank President Jean-Claude Trichet and People’s Bank of China Gov. Zhou Xiaochuan, the IMF said.

IMF Managing Director Rodrigo Rato said he was “delighted” to have such senior figures on board to advise the D.C.-based organization, which said in a report this month that it was facing a funding gap because fewer countries are resorting to its bailouts.

“I look forward to their offering recommendations that can command the support of the membership for a new financing model for the IMF that will allow us to continue to play our central role in the international monetary system,” Mr. Rato said.

The committee is to be headed by Andrew Crockett, former head of the Bank for International Settlements, which has been dubbed “the central banks’ central bank” for its role in setting the rules of global finance.

The IMF panel will also comprise Mohamed El-Erian, chief executive of the Harvard Management Co.; South African Reserve Bank Gov. Tito Mboweni; Bank of Mexico Gov. Guillermo Ortiz; and Hamad Al-Sayari, head of the Saudi Arabian Monetary Agency.

The IMF’s finances have become strained as more clients emerge from years of economic crisis, during which they became reliant on its bailouts, to stand on their own feet.

The IMF gets its liquidity for emergency bailouts from the annual subscriptions paid by its members, led by the United States, Europe and Japan.

The total available now stands at almost $200 billion, and is not affected by the funding review.

But on a day-to-day basis, the IMF largely derives its operating income from interest payments on credit extended to member states. When fewer states take out IMF credit, the organization earns less.

To plug a shortfall, the IMF said this month it would transfer its reserves of $8.7 billion into a new investment account to generate extra returns on the bond markets.

But the IMF noted that it needs to come up with long-term solutions to its funding problems.

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