IMF to discuss KL's proposal to rule hedge fund activities
IMF to discuss KL's proposal to rule hedge fund activities
KUALA LUMPUR (AFP): The International Monetary Fund (IMF) will discuss Malaysia's proposal to regulate hedge fund activities in Washington this week, Deputy Prime Minister Anwar Ibrahim said yesterday.
Anwar, who is also finance minister, said the IMF has "accepted in principal" Malaysia's proposal, aimed at protecting developing nations from excessive manipulation and financial abuses in the global market.
"The IMF contacted me last Saturday and informed me that they will start the study of the Malaysian proposal this week," Anwar told reporters on the sidelines of a stock market seminar.
The proposal was made by Anwar and Prime Minister Mahathir Mohamad during the IMF and World Bank meetings in Hong Kong last month, after speculative attacks on Southeast Asia's currencies.
"We are glad that the IMF has included Malaysia's proposal on the possibility of introducing prudential regulations on hedge fund activities in its study on the new arrangement for borrowers," he said.
Although the Washington-based IMF has guidelines for prudential regulations and supervisions of banks, it has none on hedge funds and investment houses.
Hedge funds are international funds subscribed to by wealthy individuals who aim for above-average returns by betting heavily on global currencies, a move which could destabilize currency markets.
"We should look upon the recent events as a learning experience," Anwar said. "It is now clear that all facets of our capital markets -- equity, bond and futures -- need to be strengthened."
Malaysia has blamed foreign funds and singled out U.S. billionaire financier George Soros for manipulating the ringgit and share prices on the Malaysian bourse, both which had eroded more than 30 percent in value since July.
Other regional currencies, such as the Thai baht, the Philippines peso and the Indonesian rupiah have also been hit hard.
Mahathir has urged the international community to outlaw currency manipulation and has twice called for a ban on currency trading, which immediately sent the ringgit plunging to record lows.