It is like a plea to rewrite the rules of global capitalism amid its worst crisis in 80 years.
The International Monetary Fund (IMF), ahead of a global summit of G-20 nations that include India and other emerging growth economies, has called for a new regulatory regime which would manage global capital flows equipped with early warning systems that could avert the likes of the Wall Street-led financial meltdown that shook the world this year.
In a letter to G-20 and European leaders, released after a meeting of the Group of 20 ministerial meeting at Sao Paulo, Brazil, on Sunday, IMF Managing Director Dominique Strauss-Kahn strongly endorsed recent proposals for a “New Bretton Woods” agreement – a pact named after a US town where a multi-nation pact was reached in 1944 to establish the International Monetary Fund and the World Bank.
Strauss-Kahn, a former French finance minister who took over as head of the IMF one year ago, regulation needed to cover some previously overlooked aspects.
He said regulation had to be done by national authorities but "subject to surveillance by a body or network of institutions alert to systemic implications across financial instruments, markets and countries.”
US President George Bush has invited G-20 leaders, as well as Strauss-Kahn and World Bank President Robert Zoellick, to the November 15 Washington summit to develop a common approach to combating the global economic crisis, triggered initially by the subprime mortgage meltdown in the US.
G-20 finance ministers and central bank governors gathered last weekend in Sao Paulo for a regular annual meeting that included a preparation session for next weekend's summit. Prime Minister Manmohan Singh will attend the Washington summit, which also shows the significance of emerging economies like that of India in global rule-making.
The IMF has sharply revised down its projections for world growth because of the burgeoning crisis, which has now spread to emerging market economies.