ECB economist blasts IMF plan

April 7, 2009
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, FRANKFURT, Apr 7 – The European Central Bank\’s chief economist on Tuesday slammed a G20 decision to boost the International Monetary Fund\’s resources by issuing Special Drawing Rights (SDRs).

"It is pure money creation," Juergen Stark told the German business daily Handelsblatt.

"No study has determined if there was an additional need for liquidity at the global level," the German economist said. "We used to take a lot of time to study these things."

Leaders of the Group of 20 industrialised and developing economies decided early this month in London to triple the amount of money available to the IMF to 750 billion dollars (560 billion euros).

The increase is to include 250 billion dollars raised by issuing SDRs, an "international reserve asset created by the IMF in 1969 to supplement the existing official reserves of member countries," according to the fund\’s website.

In addition to Stark, several German economic experts have voiced reserves about the decision, arguing that it will increase the amount of money in circulation and could fuel inflation once the financial crisis has passed.

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