Strauss-Kahn Says IMF Bond to Have a ‘Little’ Secondary Market
International Monetary Fund Managing Director Dominique Strauss-Kahn said there will be a “little” secondary market for the bonds that the Washington-based lender plans to issue.
Strauss-Kahn said today in Lecce, Italy that they could be traded between “bond holders, either government or central banks.” So far, Russia, Brazil and China have said they plan to subscribe.
The IMF is also considering making the bonds tradable between all central banks from countries that are IMF members, said a G-8 official, who spoke on condition of anonymity. It would stop short of allowing them to trade on the open market, he said.
“There will be a market but it is not bonds that are likely to be held by the private sector,” Strauss Kahn said after a meeting of officials from the Group of Eight nations.
The IMF, which has rescued economies from Pakistan to Ukraine since the start of the global financial crisis, is seeking more cash to finance loans and aid. As the institution taps some of its 185 members for additional cash injections, emerging economies say they want more decision-making power at the 64-year old institution.
Russia and Brazil, seeking to reduce their dependence on the U.S. dollar, this month announced plans to buy $20 billion of bonds from the IMF. Earlier, China said it will buy $50 billion in notes.
Cutting Treasuries
Russia’s central bank said this month it may cut investments in U unsecured personal loans.S. Treasuries, currently valued at as much as $140 billion, a week after China said it may reduce reliance on the dollar and American bonds. Treasuries fell after Alexei Ulyukayev, first deputy chairman of Bank Rossii, said some reserves may be moved into IMF debt.
Strauss-Kahn said that the 10 billion euros from Russia “are welcome and show the will of Russia to be an active member of the IMF.” He added that the amount “won’t damage” the relationship between Russia and the U.S. Treasury.
He also said that he doesn’t “see the dollar as being weak” and doesn’t expect many changes in the U.S. currency “in the coming time.”
The Washington-based lender raised its global economic growth forecast for next year because it sees an improvement coming from the U.S., Asia and Japan, Strauss-Kahn added.
G-8 nations today said they began considering how to reverse the emergency steps they took to rescue the world economy as signs of recovery mount and asked the IMF for assistance on the process.
Still, “before the exit strategy, we have to exit the crisis,” Strauss-Kahn said.
Filed under: news by Wolf