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September 25, 2021

Strauss-Kahn: IMF missed the looming financial storm

The International Monetary Fund failed in their critical surveillance role during the run-up to the financial crisis, said the fund’s managing director, Dominique Strauss-Kahn, The Globe and Mail.com informs. A new report by the IMF’s Independent Evaluation Office, which focuses on the IMF’s surveillance functions from 2004 to 2007, shows that the fund’s ability to “correctly identify the mounting risks”’ posed by things like global trade imbalances and the possibility that the U.S. housing bubble might burst was hamstrung by, among other things, “a high degree of groupthink,’’ and a mindset that a major crisis involving big, so-called advanced economies just wasn’t likely because markets were sophisticated enough to “thrive safely with minimal regulation.’’ The IEO found, “Weak internal governance, including unclear lines of responsibility and accountability, lack of incentives to work across units and raise contrarian views, a review process that did not `connect the dots’ or ensure follow-up, and an insular culture also played a big role.’’

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