This article is from the source 'bbc' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.
You can find the current article at its original source at http://www.bbc.co.uk/go/rss/int/news/-/news/business-12406718
The article has changed 4 times. There is an RSS feed of changes available.
Version 0 | Version 1 |
---|---|
IMF downplayed economic risks, says report | IMF downplayed economic risks, says report |
(40 minutes later) | |
An investigation into the International Monetary Fund (IMF) has said that the agency downplayed economic risks ahead of the 2008 financial crisis. | An investigation into the International Monetary Fund (IMF) has said that the agency downplayed economic risks ahead of the 2008 financial crisis. |
The organisation provided few clear warnings about the risks, the study found. | The organisation provided few clear warnings about the risks, the study found. |
The IMF's ability to identify risks was hindered by "group think" and a belief that a crisis in developed economies was unlikely. | |
The IMF's own Independent Evaluation Office carried out the inquiry. | |
The report includes some striking criticism of the IMF's performance ahead of the crisis. | |
"Weak internal governance, lack of incentives to work across units and raise contrarians views, and a review process that did not 'connect the dots' or ensure follow-up also played an important role, while political constraints may have also had some impact," the report said. | "Weak internal governance, lack of incentives to work across units and raise contrarians views, and a review process that did not 'connect the dots' or ensure follow-up also played an important role, while political constraints may have also had some impact," the report said. |
It also highlighted the view that the risks associated with complex financial products linked to the then-booming US housing market - subsequently called toxic assets - were downplayed. | |
Fund failure | |
The IMF's managing director Dominique Strauss-Kahn said the report was "humbling". | |
"The failure of the fund to warn about a systemic crisis in a sufficiently early, pointed, and effective way is a humbling fact that the institution has been frank about acknowledging and prompt about responding to." | |
The IMF has had a central role in responding to the financial crisis, with emergency loans and other assistance for some countries - such as the Republic of Ireland and Greece. | |
Its member governments have trebled the resources available for financial assistance to struggling countries. | |
Report recommendations | |
Mr Strauss-Kahn noted in his reponse to the IEO report that the agency had put in train reforms since the crisis which would "go a long way to enhance the candor and traction of surveillance, and arguably already have done so". | |
However the IEO said measures should be taken to encourage alternative views and diverse opinions both within the IMF and from outside experts. | |
The report concluded that such reforms were needed to ensure that the organisation "speaks truth to power". |