IMF welcomes joint action to address debt crisis
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Xinhua, December 1, 2011
International Monetary Fund (IMF) chief Christine Lagarde on Wednesday welcomed the joint action of the world's major central banks to provide cheaper dollar funding to European banks.
Lagarde, who is in Mexico as part of her Latin American tour, said "the joint action has shown extreme efficiency and has been well received by the markets."
The coordinated action was announced Wednesday by the U.S. Federal Reserve, the European Central Bank, and the central banks of Britain, Canada, Japan and Switzerland.
The central banks have agreed to lower pricing on the existing temporary U.S. dollar liquidity swap arrangements by 50 basis points, making it easier and less costly for banks to get U.S. dollars.
The joint action, which aims to inject liquidity into financial markets hit by the European debt crisis, is similar to a coordinated action to stabilize global markets at the peak of the financial crisis in 2008, according to some specialists.
The IMF announced that it will collaborate in the joint action with the central banks as a tradition of the international body "to complement the measures they take in order to have a comprehensive plan."
Lagarde recalled that IMF's job is preventing and resolving crisis, therefore IMF "will welcome the idea of attacking the crisis from its root and bring the necessary adjustments needed to restore confidence."
Lagarde admitted that the IMF must be prepared to help its 187 members when they are immersed in a crisis. "We are prepared for this crisis not only for the benefit of the euro area but also outside the European crisis, to help all members of the IMF," she said.
To resolve these difficult situations, the IMF has designed a line of credit or liquidity precaution to help countries undergoing crisis.
Lagarde concluded on Wednesday a visit to Mexico, which assumes the Group of 20 presidency on Friday. Lagarde will travel to Brazil.
