International Herald Tribune – Lawrence Summers has a radical idea.
The way I interpret it, the former U.S. Treasury secretary and outgoing president of Harvard University is suggesting that the International Monetary Fund should stop being just a lender oflast resort and become the world’s biggest hedge fund administrator.
It’s no secret that developing nations – especially those in Asia – have foreign-exchange reserves far in excess of what may be required to repay overseas creditors and dispel currencyspeculation.
What if, as Summers asked in a speech in Mumbai last week, they could turn over a part of this surplus – he used a figure of $500 billion – to a “facility” managed by the monetary fund and theWorld Bank?
With professional managers going to work on this pool of funds, it may be possible to generate at least 6 percent real return on investment, as opposed to zero now, Summers said.
