Press Release No. 05/132

Press Release: IMF Managing Director Rodrigo de Rato Launches Working Group to Review the Fund's Financial Sector Work

June 6, 2005

Mr. Rodrigo de Rato, Managing Director of the International Monetary Fund (IMF), today announced the formation of a Review Group on the Organization of Financial Sector and Capital Markets Work to provide the IMF with an independent perspective on how the Fund should organize its financial-sector analysis and surveillance activities. The Group, which is led by U.S. Public Company Accounting Oversight Board Chairman William J. McDonough, is expected to present a report to IMF management within six months. A similar independent working group was created in October 2000 (see News Brief No. 00/93) to review and make recommendations to IMF management.

Financial sector and capital market work at the IMF is dispersed among several functional and area departments. The Review Group is expected to provide advice regarding the effectiveness of the organization and allocation of the work among departments, especially International Capital Markets and Monetary and Financial Systems, as well as Research and Policy Development and Review.

"Since its inception, the IMF has adapted to changing circumstances. During the last 15 years, the increasing importance of private capital flows and of a stable and well-functioning financial sector have led to greater emphasis on these factors in the Fund's work," the Managing Director stated. "It is now time to review the ways in which the Fund has adapted. It is intended that analysis of financial sector and private capital flows—and the frameworks within which member governments oversee these activities—be further strengthened."

Mr. de Rato noted that as part of its Strategic Review of the IMF, the Executive Board has asked that increased attention be given to financial regulation and oversight and to the determinants of capital flows and their regulation. "This increased attention would mean that in Article IV surveillance, Fund missions would increasingly examine the regulations and environment in which domestic financial institutions and private capital markets operate, with attention to factors governing inward and outward flows of lending, equity investment, and direct foreign investment," he stated. "These are some of the issues that this Review Group will have to consider in its analysis of our work. I look forward to their findings and advice, and I extend my thanks and appreciation to them for the service they will provide to the IMF and its 184 member countries."

In addition to Mr. McDonough, who is also a former President of the New York Federal Reserve Bank, the Review Group will consist of Jaime Caruana (Governor, Bank of Spain, and Chairman of the Basel Committee on Banking Supervision), Terrence J. Checki (Executive Vice President, Emerging Markets and International Affairs, New York Federal Reserve), Mohamed El-Erian (Managing Director, Pacific Investment Management Co.), Paulo Leme (Managing Director, Emerging Markets Economic Research, Goldman Sachs & Co.), Toshiro Muto (Deputy Governor, Bank of Japan), and Joseph Yam (Chief Executive, Hong Kong Monetary Authority). Andrew Tweedie, a senior advisor in the IMF's Finance Department, will act as the secretary of the Review Group.