"One could think about strengthening and broadening the global precautionary financing instruments that work for everyone," IMF chief Christine Lagarde told an audience at Maryland University today, without offering much detail. "One could also increase the size of the safety net. Over the next few months, the IMF will be considering with our members these and other issues related to the international monetary system."
Lagarde warned of the typical risks facing the global economy.
"China has embarked on an ambitious rebalancing of its economy—from industry to services," she said.
"In the short run, however, it will lead to slower growth, and this slowdown creates spillover effects—through trade and lower demand for commodities, and amplified by financial markets."
"Oil and metals prices have fallen by around two-thirds from their most recent peaks, and are likely to stay low for quite some time. As a result, many commodity-exporting emerging economies are under severe stress, and some currencies have already seen very large depreciations."
"This has contributed to a rise of the U.S. dollar—putting considerable strain on those emerging market companies that took on large amounts of US dollar-denominated debt, especially in the energy sector."
Lagarde said the US had a "special responsibility" as it normalises interest rates and urged countries that could afford it to boost state spending.