New director addresses new issue facing IMF

Source: IMF to heed new global players - FT.com

The emergence of “sovereign wealth funds,” hedge funds and other types of investment groups as major players in the world economy is now forcing the IMF to stand up and pay attention, so says Strauss-Kohn, the newly inaugurated managing director of the IMF. Strauss-Kohn said that the prominence of these groups needs to be taken into consideration in the IMF’s work because such things as financial stability in the global economy will be affected by these groups now, rather than just by external imbalances.

This comment by the new Managing Director was perhaps influenced by certain of the IMF’s member countries, many of whom have expressed concern over these types of funds and the sentiment that the IMF needs to develop a greater understanding of them. Further, these members have suggested that the understanding should be guided primarily by the determination of the transparency and objectives of these funds.

Meanwhile, officials in the U.S. and Europe are wary about the role to be played by these types of funds, particularly whether they should be allowed carte blanche with regards to the acquisition of strategic assets. Additionally, there is the possibility of a protectionist backlash in the U.S. Congress.

Question: To what extent should the IMF involve itself in the monitoring/oversight of these funds?