ECB Trains Euro-Artillery on IMF

[Dennis R Redmond]

Really. Here's Wim Duisenberg, President of the ECB, speaking to a crowd
of financiers at the Annual Meeting of the Institute of International
Finance in Prague on Sept. 23, about the role of the IMF (full text
available at http://www.ecb.int/key/00/sp000923.htm):

"According to recent IIF estimates, in the 1990s 85% of total net inflows
of capital to the major borrowing countries came from the private sector.
Such inflows averaged USD 170 billion per annum, compared with USD 35
billion per annum in the 1980s. By contrast, net official flows averaged
USD 30 billion per annum throughout the 1990s and reached only USD 5
billion in 1999, their lowest level for over 20 years...

Second, the IMF cannot - owing to its limited resources which do not match
private capital outflows - and should not - owing to moral hazard problems
mentioned above - act as an international lender of last resort. IMF
financial assistance can neither be unlimited nor cover all the financing
needs of a country. The IMF should rather play a catalytic role. IMF
conditionality in the form of adjustment programmes should, in conjunction
with IMF financing, be instrumental in improving the external position of
member countries and quickly restoring market confidence. Actual ceilings
on access to IMF financing facilities should also be established."

In plain English, bye-bye IMF, hello EIB.

-- Dennis