The head of the International Monetary Fund on Friday called for a further increase in IMF resources so it could play a credible global lender of last resort role.
IMF Managing Director Dominique Strauss-Kahn noted that a recent $500 billion increase in IMF funding would require approval every five years and could be activated only in times of crisis.
He said that could create uncertainty about whether countries could always count on turning to the IMF in times of need.
This uncertainty means that the IMF cannot yet serve as a credible global lender of last resort, Strauss-Kahn said in remarks prepared for delivery ahead of weekend meetings of the IMF and World Bank. And because providing global financial insurance is so critical for crisis resolution and crisis prevention, the resource base of the IMF should be increased further.