IMF head urges tighter control of financial markets

PARIS: The IMF needs to tighten its control over financial markets following the global economic crisis, its managing director Dominique Strauss-Kahn said in an interview due to be published on Sunday.

He said the IMF was "ready to do what is required if we are given the mandate," saying the world faced "financial anarchy" now as it did in 1944 when the organisation was set up in the aftermath of World War II.

"We can have national or regional authorities, such as the European Union for example, but we need a global guarantor. An institution which monitors standards," Strauss-Kahn told France's Journal du Dimache.

"For the present, we have put the fire out. It is what we need to do in the current situation and that's what the US authorities are doing.

"But afterwards, we will have draw the necessary conclusions from what has just happened: we must closely regulate (financial) institutions and financial markets."

Strauss-Kahn said reforms were needed to guarantee the future of the world economy.

"If not, it will give the idea of bottomless pits... that the state will come to rescue of incompetent managers and greedy speculators," he said.

The former French finance minister said there will be "a serious and prolonged slowdown of growth worldwide" and forecast hard times ahead for Europe and developing countries hit by the rise in raw material costs.

"But the real economy is not caving in. Currencies are not falling. Central banks are handling the financial crisis," Strauss-Kahn said.

Strauss-Kahn welcomed US Treasury Secretary Hank Paulson's plan to stabilise the American financial system, but it said it must be "the first step" in a wider international political movement.

Paulson and Federal Reserve Chairman Ben Bernanke proposed last week that the US Treasury should borrow 700 billion dollars to buy toxic mortgage-related assets from struggling financial institutions, in a bid to counter a credit crisis. The plan is subject to approval from US lawmakers.