IMF asks USA to change its ways, calls for tighter watch on securitized paper

WASHINGTON, Oct 20, 2007 (LBO) – The International Monetary Fund named the United States first in a list of countries that were undermining global economic stability and called for tighter regulation of asset-backed securities. . The monetary watchdog's premier policy making body, the International Monetary and Financial Committee (IMFC), called on the United States to cut its budget deficit and boost domestic savings.

"I think that we all recognize that looking at these issues from a multilateral perspective will be important to help ensure that we preserve a strong global financial system," IMF chief Rodrigo de Rato told reporters here Saturday.

Europe and Japan, which are seeing a rapid rise in ageing populations, were asked to reform their economies. Asian countries with high foreign reserves, with the exception of India which had already floated her currency, were asked to allow currency appreciation.

Japan was also asked to cut its deficits but oil producing nations were asked to spend as much as their economies could stand.

The United States has been on a spending boom in recent years with huge capital inflows from Asian nations such as China which were building forex reserves and investing them in US