Summary
11 February 2011
An investigation of the International Monetary Fund concluded that the institution downplayed the risks faced by the world economy before the 2008 financial crisis. The enquiry was carried out by the IMF’s Independent Evaluation Office.
Reporter:
Andrew Walker
IMF head Dominique Strauss-Kahn welcomed the report
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Report
The report includes some striking criticism of the IMF's performance ahead of the crisis. The agency provided few clear warnings about the risks, the report says.
IMF surveillance of the economic situation was characterised by over-confidence in the soundness of large financial institutions. The risks associated with housing booms and financial innovations, subsequently called toxic assets, were downplayed.
The IMF's managing director Dominique Strauss-Kahn welcomed the report, which he said puts forward many constructive ideas and is consistent with the Fund's own analysis.
The IMF has had a central role in responding to the crisis, with emergency loans and other assistance for some countries. The IMF has a continuing role in dealing with the financial problems in the Euro area, where it is providing loans to both Ireland and Greece.
Andrew Walker, ´óÏó´«Ã½ News
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Vocabulary
- striking
very noticeable or unusual
- warnings
things said or written to tell people about a possible danger
- surveillance
careful watching of something
- soundness
stability
- housing booms
times when a lot of houses are being built and sold for high prices
- toxic assets
investments backed by risky mortgages that are held by large banks, and that have lost value, dragging down banks' balance sheets
- puts forward
suggests or presents
- constructive
helpful or positive actions or comments
- consistent
behaviour or actions which are the same over a period of time
- emergency loans
lending of money which is desperately needed
