New IMF chief Koehler open to AMF, capital control

New IMF chief Koehler open to AMF, capital control

BANGKOK (Reuters): Neither the idea of an Asian Monetary Fund (AMF) nor controls on capital movement were "taboo" to the new managing director of the International Monetary Fund (IMF), he said on Thursday.

However, IMF MD Horst Koehler added caveats and qualifications to his comments on both issues.

Koehler told reporters after meeting Thai Prime Minister Chuan Leekpai he was not opposed in principle to the AMF idea but it should be complementary to the IMF, not against it.

"I am in principle against no idea which is well thought through," Koehler said.

He said an AMF was a "conceptual idea," which "can't be a taboo".

The AMF idea was proposed some years ago by Japan and has gained sympathy in Asian countries that feel they have insufficient say in the running of the Washington-based and largely Western-controlled IMF.

But no formal proposal for an AMF has yet been made.

As a former vice finance minister of Germany who helped found the European Monetary Union, Koehler said he supported "everything which is enhancing, promoting economic cooperation and integration in the region".

Koehler said he supported the "Chiang Mai Initiative", an agreement reached last month on the sidelines of the Asian Development Bank annual meeting for Asian nations to pool resources to bolster currencies under speculative attack.

"I'd like to express my support for the Chiang Mai Initiative, which is complementary to the IMF approach," he said.

On capital control measures, Koehler said they were not a "taboo" but ought to be imposed only under special circumstances.

Koehler said control of capital movements discouraged inflow of capital when countries assessed their internal situation was "not mature enough to absorb this capital".

He referred specifically to the situation in Chile, which imposed a form of capital controls for a time.

"I could not think that this kind of decision should and could be a taboo," said Koehler who has been in the job of IMF chief for just one month, succeeding Michel Camdessus.

Camdessus had also said the IMF was not opposed to capital controls in themselves, but said they could give countries a false sense of security.

But Koehler said the basic and overall issue was confidence in the soundness of the country and its economic management.

Koehler said he would discuss this and other issues with Indonesian President Abdurrahman Wahid during a meeting with him later on his Asian tour.