IMF to adopt new scheme to offer short-term dollar funds
Tokyo — The International Monetary Fund (IMF) will introduce a new facility to give countries swift access to short-term dollar funds to guard against a potential financial crisis, a Japanese government source with direct knowledge of the matter said on Tuesday.
The move comes amid concern held by some analysts that the Federal Reserve’s monetary tightening path could trigger a withdrawal of funds from emerging Asian economies and disrupt financial markets.
Under the new scheme, member countries that undergo a preliminary review can tap the IMF for short-term dollar funds they can use to battle any speculative attack on their currencies, the source said, on condition of anonymity due to the sensitivity of the matter.
The new facility has been under consideration at the IMF to strengthen safeguards against abrupt rises in market volatility. Its creation will be formally decided at the IMF’s board meeting at the end of this month, the source said.
"The IMF is considering various measures, as it sees the importance of strengthening global safety nets to guard against potential liquidity problems," an IMF official told Reuters.
The Nikkei newspaper reported earlier on Tuesday that the IMF will adopt the new dollar-funding facility that will not set strict conditions on borrowing countries.