Yahoo Finance Lagarde backs creation of a European Monetary Fund
International Monetary Fund chief Christine Lagarde has backed plans to transform the eurozone’s bailout fund into a European Monetary Fund independent of the IMF.
In a weekend interview, Ms Lagarde appeared to give the plans her blessing by saying the proposed European Monetary Fund could fill the need for an independent crisis management system for the region.
The European Commission has suggested transforming the role of the government-controlled European Stability Mechanism (ESM) into a full-blown European Monetary Fund under parliamentary control and anchored in European Union law.
The new body, which has strong backing from both French and German governments, would also become a backstop for the euro zone’s bank resolution fund.
“Why not?” Ms Lagarde said in an interview with Swiss newspaper Tages-Anzeiger. “The crisis the eurozone went through showed that it needs a crisis management system that is independent, able to act quickly and that works according to strict rules. What that mechanism is called is secondary. If one wants to call it European Monetary Fund, then please.”
She also dismissed the suggestion that the formation of a new European monetary anchor would usurp the role of the IMF which has bailed out Portugal, Ireland, Cyprus and Greece in recent years, often in exchange for oversight and painful reforms.
“We do not serve a region but 189 countries. That also includes eurozone countries. And if together they decide that other crisis mechanisms like the ESM are involved, that is in order,” she reportedly told the paper.
