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| IMF downplayed risks ahead of 2008 crisis, says report | IMF downplayed risks ahead of 2008 crisis, says report |
| (2 days 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 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 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. | 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. | 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 | Fund failure |
| The IMF's managing director Dominique Strauss-Kahn said the report was "humbling". | 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 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. | 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. | Its member governments have trebled the resources available for financial assistance to struggling countries. |
| Report recommendations | Report recommendations |
| Mr Strauss-Kahn noted in his response to the IEO report that the agency had put in train reforms since the crisis which would "go a long way to enhance the candour 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. | 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". | The report concluded that such reforms were needed to ensure that the organisation "speaks truth to power". |