UK’s Brown-IMF should help with self-insurance

British Prime Minister Gordon Brown said on Friday that the International Monetary Fund should have the means to help countries insure themselves against future crises and lessen the need for reserve accumulation.

In a letter to his fellow EU leaders, released by his office, Brown said the IMF and the World Bank had to become more representative of the global economy and more independent and effective in monitoring the global economy.

G20 leaders meeting in Pittsburgh next week are set to discuss how the world can stop the global imbalances that have plagued the world economy for so many years reappearing when recovery finally comes.

Policymakers are trying to figure out where economic growth can come from if the U.S. consumer is no longer able to be the engine of prosperity and are looking for ways to ensure that surplus countries boost their own demand and deficit countries save more.

But they are also conscious that the crisis may have actually made it harder to persuade surplus countries not to build up huge currency reserves to protect themselves against future credit crunches.

"The IMF and the World Bank must have the tools they need to help countries manage and insure themselves against the risk of future crises," Brown said.

"This could involve improvements to IMF facilities to make them attractive to a wider range of countries, the development and integration of regional reserve pooling arrangements, and the use by the multilateral development banks of innovative new facilities, to provide protection against sudden stops in global capital flows."