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21 Jan, 2008

Helen Pow - 21-Jan-2008

Gordon Brown believes a worldwide financial watchdog should be established to avoid another global credit crisis, according to the Daily Telegraph.
Brown wants institutions such as the International Monetary Fund and the World Bank to be reformed to focus more on identifying rapidly changing economic conditions and warn against global market disruptions before they become too serious.

The paper quoted Brown as saying in a speech to business leaders in New Delhi today: "The IMF and World Bank were created for the age of sheltered nation states. But they now have to change to become properly equipped for a world where national problems can quickly become global - and contagion can move swiftly as the fastest communication.

"So with financial markets and flows transformed by globalisation, I propose that - acting with the same independence as a central bank - the IMF should focus on surveillance of the global economic and financial system and thus prevent crises not just resolve them."

But Brown believes the Northern Rock debacle was caused by a bad business plan and could therefore not have been prevented by such a global watchdog. Although he says the wider-effects of the sub-prime crunch in the US could have been lessened.

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