Brazil would support the International Monetary Fund acting as a kind of global central bank, offering liquidity and currency swaps, Brazilian Finance Minister Guido Mantega said on Friday.
Such a role for the IMF would be part of increasing coordination in global policy and efforts to fix economic imbalances between countries, Mantega told reporters at the semiannual meeting of the IMF in Istanbul.
He said giving the IMF such a role could eliminate one big global imbalance -- the need to build up large foreign exchange reserves, as many large developing countries such as China and Brazil have done in recent years.
"Brazil and other countries that have large reserves are ready to do this," Mantega said.
"For us to start to work with lower reserves, it's necessary that the IMF transforms itself into an institution more like a global central bank that can offer foreign currency support. Today it does not have the instruments for that."
In such a system, which would build on increasing coordination between the Group of 20 major economies since the global economic crisis erupted, the IMF would stand ready with considerably larger resources than today to help countries that faced problems.
The IMF's current system of evaluating countries' economic performance means the fund already has expertise to carry out such a role, Mantega said.
He added that the IMF would also need to be ready to offer currency swaps. During the global crisis, the U.S. Federal Reserve offered currency swaps to countries including Brazil.
Since the crisis erupted last year, Brazil has championed greater clout for developing countries and for increased international cooperation to prevent future crises.
The idea of the IMF effectively becoming a global central bank is one of many ideas for radical reform informally discussed by officials and academics around the world over the past year.
Reuters
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