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.