World Bank Mulls Currency Controls
SINGAPORE (AP) _ The World Bank is studying ways of controlling wild fluctuations in foreign currency trading, bank president James Wolfensohn was quoted as saying in a report today.
Wolfensohn, on an Asian tour to study the social impact of the persisting financial crisis, said he would be ``getting ideas″ from Malaysia’s Prime Minister Mahathir Mohammad and Finance Minister Anwar Ibrahim, according to The Straits Times newspaper.
Wolfensohn was heading to Malaysia today after meeting with Singaporean leaders.
At a World Bank and International Monetary Fund meeting in Hong Kong last September, Mahathir proposed regulating currency trading, particularly hedge fund activity that he blamed for the crash of Malaysia’s currency and stock markets.
``One of the issues raised by Prime Minister Mahathir was the impact of currency speculation and I think that it is an issue that deserves serious attention and that’s why we’re studying it,″ the newspaper quoted Wolfensohn as saying.
``I don’t think the answer is simple. Nor do I think that currency speculation is the cause of all the problems in Asia,″ he said. ``What we need is some sort of balance.″
Wolfensohn spoke briefly to local reporters Sunday after addressing the International Confederation of Free Trade Unions.
He said the currency study will be headed by the bank’s chief economist, Joseph Stiglitz, who has criticized the bank’s sister organization _ the International Monetary Fund _ for imposing strict austerity measures on Asian countries in return for emergency financial help.
``You don’t want to put these countries into severe recession,″ Stiglitz told The Wall Street Journal last month. ``One ought to focus on things that caused the crisis, not on things that make it more difficult to deal with.″
In his remarks in Singapore, however, Wolfensohn defended the IMF.
``The important thing when you’re putting out a fire is to get the fire out and the (IMF) acts something like a fire brigade,″ Wolfensohn told the newspaper.