IMF chief warns that momentum is vanishing for reform of global financial regulation

IMF: financial regulation reform losing momentum

BUCHAREST, Romania — The international drive to reform financial regulation is losing steam as signs of recovery in the global economy decrease leaders’ sense of urgency, the managing director of the International Monetary Fund warned Tuesday.

Dominique Strauss-Kahn said the economic crisis revealed the need for “global answers.” But as the turmoil eases, “the momentum (for cross border regulations) is vanishing.”

Speaking in Bucharest during a one-day visit to Romania, Strauss-Kahn urged countries to pool their efforts to reform regulation.

“Global economy is a reality. You have to deal with this (…) and put more stress on cooperation,” he said.

The IMF chief said that if a similar crisis were to happen in the future, “it would be difficult, if not impossible, for governments to ask taxpayers to pay again” to bailout the banks. He said the IMF will present next month a proposal for a levy on banks, “to curb risky behavior and provide resources” to cover future bailouts.

Strauss-Kahn warned that Europe’s economic recovery is lagging behind the United States and Asia. He said if Europe does not act swiftly now, in 10-20 years it could be “in the second league.”