Geithner Urges $500 Billion Global IMF Contribution

U.S. Treasury Department secretary Tim Geithner called on global finance leaders to increase their contribution to the International Monetary Fund (IMF) by up to $500 billion in a move for global stimulus support that surprised few. His statements, released Wednesday before the G-20 meeting of finance ministers in London, urged a worldwide effort in concert with recent actions geared toward stabilizing the U.S. financial system. “Forceful financial sector actions are critical to rebuild confidence, restore market functioning, get credit flowing and bring stability to the global financial system,” Geithner said. “In the United States, we are implementing a series of aggressive initiatives to stabilize and strengthen our financial system to support economic recovery, and we look for complementary actions around the world.” He called for a wave of support for developing countries and countries in crisis beyond the individual efforts already called for by the IMF (the benchmark for member countries to in place a fiscal stimulus of 2 percent of aggregate gross domestic product each year for 2009 and 2010). Geithner called on the G-20 to not only “substantially” increase emergency IMF resources, but also to increase country membership in the G-20 summits. “We welcome the international effort to raise temporary resources for the IMF,” he said. “In addition, we are prepared to explore additional actions to provide support for the poorest countries given the impact of the crisis and the need for global liquidity.” He also urged G-20 countries to implement increased regulation going forward, to construct “strong standards” with which to supervise and govern “systemically significant” global financial firms, to oversee markets — like derivatives — that are critical to the functioning of the global financial system, and to implement a stronger framework of capital requirements to insure institutions are able to “build up capital in good times and draw capital down as a buffer in bad times.” Geithner called on the G-20 countries to fight money laundering, terrorist financing and the use of offshore tax havens by those avoiding tax payments, and to build a framework of cooperative global action that can be used in times of financial crisis. Write to Diana Golobay at [email protected].