IMF Economist: Central Banks Need to Supervise Financial Markets
Oliver Blanchard, the chief economist of the International Monetary Fund, said that supervision levels of banks and financial markets should be raised, Reuters reports.
Blanchard called on central banks to assume responsibility not only for monetary policy but also for the oversight of financial markets. He said that the previous financial crisis has taught economists that central banks need to step up their regulations in order to prevent a similar meltdown from occurring, prioritizing stability over the independence of such markets.
Among Blanchard’s other remarks were that inflation could be targeted higher, closer to 4 percent than 2 percent, in order to increase the amount of capital available in the system. This could allow a boost in investment in small- and medium-size businesses.
The IMF’s chief economist also called on Germany to take a more active role in the eurozone, saying that the priority for all of the countries in the region should be to strengthen and solidify the euro. By this, Blanchard was referring to a proposed banking union for the eurozone, an idea that Germany has repeatedly rejected.