IMF managing director Dominique Strauss-Kahn said it was too early for policymakers to withdraw stimulus that’s driving the global recovery.
“The global economy is recovering, even if its recovery is fragile,” Strauss-Kahn said in a speech at Tokyo University in Japan’s capital yesterday.
A plan to withdraw emergency measures “should be designed today” yet not “implemented” because world economies are still dependent on government support and private demand remains weak, he said.
Strauss-Kahn had said earlier this month that the world’s economic recovery is occurring “sooner and stronger” than anticipated. More than US$2 trillion in government spending around the world has spurred growth, pulling economies out of a recession spurred by a meltdown in the US housing market.
Government measures “should be focused more on what is likely to fight unemployment,” he said yesterday.
Strauss-Kahn said countries haven’t done enough to tighten regulation in the wake of the global financial crisis.
“The root of the crisis” was “a failing of regulation and supervision of the financial sector in the US,” he said. “A lot has already been done, but it’s not enough.”
He urged nations to consider having companies in the financial sector help solve the problems they created.
US President Barack Obama’s proposed levy on the country’s banks is “very welcome” and “a good idea,” Strauss-Kahn said.
Obama is proposing a tax on the country’s biggest financial firms to get back taxpayer money that bailed out those companies during the worst recession since the 1930s. The fee would apply to financial companies with assets of more than US$50 billion such as Citigroup Inc, American International Group Inc and Bank of America Corp.
Non-financial companies that also got bail-out aid including General Motors Co and Chrysler Group LLC would be exempt from the levy.
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