Europe South Asia Asia Pacific Americas Middle East Africa BBC Homepage World Service Education



Front Page

World

UK

UK Politics

Business

Sci/Tech

Health

Education

Sport

Entertainment

Talking Point
On Air
Feedback
Low Graphics
Help

Monday, September 21, 1998 Published at 21:42 GMT 22:42 UK


Business: The Economy

Blair calls for world finance reform

Calls for IMF to be overhauled or merged with World Bank

UK Prime Minister Tony Blair has called for an overhaul of the world's financial institutions in a bid to prevent another global economic collapse.

The call comes in the wake of the crises in emerging market economies and after the BBC found evidence in Russia of waste and theft of IMF grants.


Professor Richard Layard of LSE: 'There has to be a body like the IMF who can step in'
Mr Blair, currently chairman of the Group of Seven (G7) leading industrial nations, made the call in a speech at the New York Stock Exchange on Monday evening.

He said he would like to see "a new Bretton Woods for the new millennium".

The IMF and the World Bank were created in 1944 at a conference in Bretton Woods, New Hampshire, to help create a new economic order after World War II.

But critics contend they have failed to keep pace with dramatic changes in global economies.

Mr Blair said: "The current crisis illustrates the weaknesses of the existing international financial system."

One-year target

And he outlined five proposals for development over the next year and called for the personal involvement of heads of government to make the project work.


[ image: Mr Blair addressed 20 business leaders at the New York Stock Exchange]
Mr Blair addressed 20 business leaders at the New York Stock Exchange
The prime minister said the organisation charged with overseeing the world's financial stability has failed in its mission over the last year.

He said: "We should not be afraid to think radically and fundamentally.

"The Bretton Woods institutions are now 54-years-old ... the current crisis illustrates the weakness of the existing international financial system. It needs to be modernised to meet the challenges of the new century ...

"We should set ourselves a deadline of one year in which this work should be done, so that we can have reformed institutions in place before the new millennium."

Merger idea

Downing Street sources say the spread of financial turmoil from Asia to Russia and Latin America shows the IMF and World Bank are not up to the job.


[ image: Blair to lead criticism of IMF]
Blair to lead criticism of IMF
The Financial Times reports that Treasury officials will present a plan to merge partially the IMF and World Bank, force big private players like George Soros to be more open and accountable, and demand that nations publish their foreign currency exposures and long- and short-term debt positions each month.

Meanwhile, an investigation by the BBC's Jonathon Charles has revealed that Russia's chief auditor uncovered widespread abuse of IMF funding grants to the country.

Venyamin Sokolov, director of Russia's chamber of accounts, says that billions in IMF aid from the West was lost through corruption or used improperly.

The International Monetary Fund is considering whether to lend Russia another £3bn in the wake of the latest economic turmoil.

IMF impotence

However, the allegations involve funds for individual projects, not the aid sent to help the government re-establish financial stability.

This is important to remember in discussing any revamp of the IMF, said Professor Richard Layard of the London School of Economics.

He agrees on the need for an overhaul and says the IMF or a similar body must be able to stop the runs on currencies which precipitated the Asian and Russian crises.

He said: "The Russian government had less debt than the Maastricht criteria, no balance of payments problem, low inflation, an improving budget and it was all washed away in a run on the currency."





Advanced options | Search tips




Back to top | BBC News Home | BBC Homepage | ©


The Economy Contents

Relevant Stories

20 Sep 98†|†Europe
Billions in Russian aid 'stolen or wasted'

15 Sep 98†|†The Economy
Clinton calls for global summit to stave off collapse

14 Sep 98†|†The Economy
Clinton goes into bat for strapped IMF

13 Sep 98†|†The Economy
IMF cash crisis

26 Aug 98†|†The Economy
IMF talks over rouble crisis





Internet Links

International Monetary Fund


The BBC is not responsible for the content of external internet sites.




In this section

Inquiry into energy provider loyalty

Brown considers IMF job

Chinese imports boost US trade gap

No longer Liffe as we know it

The growing threat of internet fraud

House passes US budget

Online share dealing triples

Rate fears as sales soar

Brown's bulging war-chest

Oil reaches nine-year high

UK unemployment falls again

Trade talks deadlocked

US inflation still subdued

Insolvent firms to get breathing space

Bank considered bigger rate rise

UK pay rising 'too fast'

Utilities face tough regulation

CBI's new chief named

US stocks hit highs after rate rise

US Fed raises rates

UK inflation creeps up

Row over the national shopping basket

Military airspace to be cut

TUC warns against following US

World growth accelerates

Union merger put in doubt

Japan's tentative economic recovery

EU fraud costs millions

CBI choice 'could wreck industrial relations'

WTO hails China deal

US business eyes Chinese market

Red tape task force

Websites and widgets

Guru predicts web surge

Malaysia's economy: The Sinatra Principle

Shell secures Iranian oil deal

Irish boom draws the Welsh

China deal to boost economy

US dream scenario continues

Japan's billion dollar spending spree