The head of the International Monetary Fund is warning governments
there is a real danger to the economy if they prematurely end the
extraordinary efforts they have been making to stimulate the economy.
Dominique
Strauss-Khan spoke in Germany on Friday, where he also said efforts to
reform financial regulation are moving too slowly.
The IMF chief's comments come as the battered economy appears to be recovering from the worst financial crisis in decades.
To
stimulate the economy, governments have cut interest rates to historic
lows, and taken other steps to increase the amount of money available
for businesses and consumers to borrow.
These policies are
expensive, and could increase the risk of inflation in the future, so
officials want to curtail them as soon as possible.
Strauss-Khan
also said there is broad agreement on the need to improve the way the
financial system is regulated, but considerable debate on how to do
it. He spoke in particular about changing the way financial executives
are paid. Critics have said short-sighted policies have given huge
bonuses to executives that took huge short-term risks, with sometimes
disastrous long-term consequences.
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