WASHINGTON The International Monetary Fund should not be blamed for missing warning signs of the financial crisis because the United States rejected a banking regulatory and oversight method the Fund had suggested, IMF chief Dominique Strauss-Kahn said on Thursday.
Strauss-Kahn said most European countries had adopted measures spelled out in the Financial Sector Assessment Program, which was introduced in 1999 as a means to promote sound financial systems. The FSAP requires that a team of experts perform detailed assessments of the financial sector.
"What is interesting is that until a few weeks ago, the United States had refused to have an FSAP," he said. "We can't be (held) responsible for lack of supervision ... owing to the fact that our main instrument to make that kind of supervision was not used in this country."
Strauss-Kahn was responding to a question on whether the Fund could lead the way out of the current crisis when its record at predicting and preventing it was mixed at best.
"The IMF has done extensive analysis of the U.S. financial system and regulations," a U.S. Treasury spokesman said.
"An FSAP (Financial Sector Assessment Program) is not the only vehicle for doing this," he added. According to an August 2007 IMF document on the U.S. economy, the Treasury agreed to start an FSAP in late 2009.
IMF officials said earlier this week they were "humbled" by their failures in raising the alarm about financial market strains that exploded in August, triggering a credit contraction that has slowed global economic growth.
Strauss-Kahn said world central banks, including the U.S. Federal Reserve and European Central Bank, had performed "very well" in their handling of the crisis. However, he said adopting more standardized ways of intervention would help markets clearly understand policy-makers' intentions.
"The signal given to the market is more likely to be understood if it's the same signal, given the same way," Strauss-Kahn said.
Central bankers and finance ministers from the world's rich nations are scheduled to meet on Friday to discuss causes of the credit crisis and new measures to avoid a recurrence.
(Editing by Richard Chang)