Global leaders race the clock

IMF confident governments will act in time to avert meltdown
By Rex Nutting & Greg Robb, MarketWatch
Last update: 5:50 p.m. EDT Oct. 11, 2008 Comments: 1578

WASHINGTON (MarketWatch) -- Policymakers from around the globe are united in their resolve to avert a global financial meltdown, the International Monetary Fund said Saturday.
Although the talks in Washington this weekend haven't come up with the specific solutions needed for each nation, the whole world is committed to do whatever it takes to unfreeze credit markets, said Dominique Strauss-Kahn, the IMF's managing director.
"No one is going to let an important financial institution fail," Strauss-Kahn said. Earlier in the day, he opened up the discussions by warning that worries about the insolvency of major banks had pushed "the global financial system to the brink of systemic meltdown."
The IMF specifically endorsed the plan of action put forth Friday by the Group of Seven nations, which calls for public funds to recapitalize banks. Critics said the G7 plan was woefully short on the specifics needed to calm jittery investors.
Although different countries may use different methods, they are all resolved to act as needed, said Youssef Boutros-Ghali, head of the IMF's International Monetary and Financial Committee. "No tool will be spared."
Even as urgent talks continued in Washington, authorities in the United Kingdom were preparing to unveil the specifics of their plan to recapitalize its banking sector, according to a report in the Wall Street Journal. See full story.
Many observers say the officials are working against the clock, with global markets set to open on Monday, with or without a credible plan from the world's governments.
The plan put forth by the Group of Seven on Friday was seen by many as only a first step.
President Bush urged global finance leaders on Saturday to work together quickly on a "serious global response" to "the serious global crisis" in credit markets.
Top policymakers from the Group of 20 largest economies were meeting later Saturday to work on a coordinated response to calm markets that have been shaken by massive losses and bankruptcies.
"We're in this together. We will come through this together," Bush said Saturday after meeting with finance leaders of the G7 industrialized nations at the White House.
Leaders of the 15 euro-zone countries will meet in Paris on Sunday to discuss a rescue plan based on the British model, which includes massive recapitalization and an explicit guarantee of all interbank credits, as urged by the IMF, U.K. Prime Minister Gordon Brown and many outside experts.
On Friday, U.S. Treasury Secretary Henry Paulson said his staff was working as quickly as they could to implement a plan to recapitalize important U.S. financial institutions. Paulson was able to provide few details, however.
The G7 response was a five-part plan similarly lacking in details, although it did provide a common framework, calling for recapitalizing banks with public and private funds, insuring depositors and unfreezing credit markets. Pointedly, however, the G7 plan did not include one of the two major suggestions made by Brown: government guarantees of all bank liabilities.
The G7 said that "urgent and exceptional action" is needed to stabilize financial markets.
The G7 vowed to use all available tools to support systemically important financial institutions and prevent them from failing.
At first blush, some analysts were not too impressed.
Vincent Reinhart, a former top staffer at the Federal Reserve Board, said markets had no interest in pledges but wanted to know exactly what the G7 would do before trading resumes Monday.
"I think the finance ministers just failed a test, or at best got a C minus," wrote Paul Krugman, a Princeton University economics professor and New York Times columnist.
But Sherry Cooper, chief economist at BMO Capital Markets, said she thought the principles expressed by the G7 would reassure markets.
Ahead of the meeting, Ken Rogoff, a Harvard University professor and former chief economist at the IMF, told MarketWatch that there needed to be an "overwhelming" G7 statement.
"I think the worst thing to do would be to come out with a very tepid response," he said. "It would be the end of the G7."
On Saturday, Rogoff told Reuters that "markets are going to be very disappointed" by the G7 statement.
The Group of Seven includes the United States, Japan, Germany, France, Italy, the United Kingdom and Canada. The European Union is also a participant. The G20 includes those eight and adds China, Brazil, Russia, India, Mexico, South Korea, Saudi Arabia, Argentina, Australia, Indonesia, South Africa and Turkey. Together, the G20 account for about 90% of global gross domestic product.
The weekend meetings came as global stock markets endured another volatile day on Friday, capping one of the worst weeks ever. Investors around the world scrambled to move their funds into the safest and most liquid investments, such as cash and government bonds, fearing that the seizing up of credit markets could lead to a major recession and the failure of large corporations.
Rex Nutting is Washington bureau chief of MarketWatch.
Greg Robb is a senior reporter for MarketWatch in Washington.

Mongolia to decide on Rio Tinto's Oyu Tolgoi gold, copper project before June

By Denny Kurien
Last update: 7:02 a.m. EDT April 9, 2008
SINGAPORE (MarketWatch) -- The Mongolian parliament is expected to pass amendments to its mining law within weeks, giving the state greater control over its resources sector and clearing the way for a decision on Rio Tinto Plc's (RTP) $3 billion Oyu Tolgoi copper and gold project before June elections, a senior government official said Wednesday.
A key change in the proposed amendment is a plan to give the government an option to seek a higher, 51% share in strategic projects, as opposed to 34% now, said Bold Luvsanvandan, chairman of the Mineral Resources and Petroleum Authority of Mongolia.
Strategic projects are defined as those with revenue exceeding 5% of Mongolia's gross domestic product, which currently is around $3 billion.
There could also be a possible change in the definition of strategic projects, Bold said.
When the amendment is on the statute books, investors may also have an option of offering the government a 51% stake in their projects or alternatively signing a mutually negotiated production sharing agreement with the government.
Rio's development of the Oyu Tolgoi project has been put back until 2011 from 2010 because of delays in winning over the government for an agreement.
Asked if Rio Tinto will be forced to part with 51% of Oyu Tolgoi when the law is amended, Bold said as a private project, this was a slightly different case and factors such as whether the investment has already paid off will be considered before taking a decision.
On other contentious issues such as a windfall tax in key minerals introduced by the government, Bold said while the government wants to move ahead with some changes, they are unlikely to do so until after the elections.
Mongolia has in place a 68% windfall tax on copper concentrate, on the portion of the price that is above $2,800/ton while there is a similar tax on gold when the price exceeds $500 an ounce.
On gold, for example, the country is planning to raise the base price above which the windfall tax kicks in to $800/oz, but these proposals will take time, Bold said.
Risky To Offer Investors Too Little A StakeWhile authorities are hopeful of getting the new legislation in place by the end of April, the government is aware of the risks of offering investors too little in return, Bold said.
"The main danger is if we worsen the investment climate, the only investors we are left (with) will be neighboring countries China and Russia," he said.
Bold's comments come at a time when resource-rich countries around the world are seeking greater control over their vast stores of crude oil and other minerals.
The trend - widely called resource nationalism - has seen several foreign energy firms operating in countries such as Russia, Venezuela and Kazakhstan strong-armed into agreeing to less beneficial contractual terms, like higher taxes and a lower share of oil profits.
Mongolia has large estimated reserves of minerals including copper, gold, coal and uranium that have attracted interest from mining heavyweights including BHP Billiton Ltd.

Despite the reported interest from these firms, Bold said an imbalance exists in Mongolia's resources industry. Landlocked Mongolia's only neighbors are Russia and China, and they are also its predominant investors.
"Russia is also a resource country, which means a competitor. And China is a consumer country, so if the consumer owns the resources, we will also have economic risks," he said.
"That's why our government's goal is to encourage (a diversity of) countries and larger multinational corporations to be present in Mongolia's resources industry," Bold said.
Russian, Chinese Companies Prepare GroundIn February, media reports cited Russian Prime Minister Viktor Zubkov as saying Russian companies Basic Element and Severstal JSC could compete to become strategic partners in developing the Tavan Tolgoi coal field in Mongolia, with more Russian operations eying other mineral deposits in the country.
China Shenhua Energy Co. (1088.HK), China's largest integrated coal producer by output, is in talks to buy mining assets in Mongolia, company chairman Chen Biting said on Mar. 17.
Bold said it would be hard to limit Russian and Chinese investment, and Mongolia would instead seek to attract additional foreign investment through a stable tax climate and by making improvements in the transport network and other infrastructure.
-Contact: 201-938-5400

Bloomberg on Global Economy

Europe's Leaders Meet to Forge New Measures to Prevent Economic 'Disaster' European leaders meet today to forge a new set of measures to combat the credit freeze after their failure to act a week ago contributed to the worst sell-off in the region's stocks in two decades.

U.K. Government May Put Its Representatives on Bank Boards, Official Says The British Treasury may appoint its own representatives to the boards of the country's biggest banks as it begins buying stakes in them over the next few weeks, a government official said.

G-7 Pledges to Take `All Necessary Steps' to Stem Global Financial Crisis Group of Seven finance chiefs, meeting after stocks plunged and as a global recession looms, vowed to prevent the collapse of major banks while failing to unveil new initiatives for thawing credit markets.

Trichet, ECB Officials Say Liquidity Steps Will Take Time to Calm Markets European Central Bank policy makers led by President Jean-Claude Trichet said it will take time for their liquidity measures to soothe markets, suggesting another interest rate cut isn't imminent.

IMF's Strauss-Kahn Says U.S., Europe Must Do More to Calm Global Markets The U.S. and European nations may need to take additional steps to stem the global financial crisis, said International Monetary Fund chief Dominique Strauss-Kahn.

China Will Spur Domestic Demand to Sustain `Fast, Stable' Growth, Yi Says China will boost domestic demand to sustain the nation's ``fast and stable'' economic growth, central bank Deputy Governor Yi Gang said.

India's Subbarao Says He's Ready to Take `Swift' Action to Boost Liquidity Indian central bank Governor Duvvuri Subbarao said he's prepared to take ``effective'' steps to maintain liquidity in the nation's credit markets and repeated the bank's policy of smoothing swings in the currency.

G-20 Nations Agree on Need for Crisis Cooperation, Brazil's Mantega Says Finance officials from the Group of 20 countries agreed on the need for a more coordinated response to the biggest global financial crisis in 80 years, Brazilian Finance Minister Guido Mantega said.

King Must Stop Morality `Lessons' on U.K. Banks, Ex-Thatcher Adviser Says Bank of England Governor Mervyn King should stop giving banks ``lessons in morality'' and focus on preventing financial collapse, said Patrick Minford, a former adviser to Margaret Thatcher.

Germany Faces `Extremely Difficult' 2009 Amid Credit Crisis, Minister Says German Finance Minister Peer Steinbrueck said Europe's biggest economy will struggle to grow next year amid the fallout from the financial crisis.

Nakagawa Says Japan May Inject Cash Into Banks Should Global Crisis Spread Japanese Finance Minister Shoichi Nakagawa said the government may inject public money should the global credit turmoil threaten the nation's financial institutions.

Fed Watch

G-7 Pledges to Take `All Necessary Steps' to Stem Global Financial Crisis Group of Seven finance chiefs, meeting after stocks plunged and as a global recession looms, vowed to prevent the collapse of major banks while failing to unveil new initiatives for thawing credit markets.

Bernanke, Paulson Seek Global Help as Credit Crisis Defeats U.S. Efforts Federal Reserve Chairman Ben S. Bernanke and Treasury Secretary Henry Paulson are discovering both the leeway and limits they have as policy makers as they struggle to combat the 14-month-old credit crisis.

U.S. Will Likely Avoid a `Lost Decade' Like Japan's, Fed's Lockhart Says Federal Reserve Bank of Atlanta President Dennis Lockhart said the U.S. probably doesn't face the prospect of a ``lost decade'' similar to the economic challenges that beset Japan during the 1990s.

http://www.bloomberg.com/news/economy/

Abramovich, Deripaska, Oligarchs Lose $230 Billion (Update1)

By Yuriy Humber, Greg Walters and Maria Kolesnikova

Oct. 10 (Bloomberg) -- Russian billionaires from aluminum magnate Oleg Deripaska to soccer-club owner Roman Abramovich lost more than $230 billion in five months during the nation's worst financial crisis since the 1998 default on its debt.

The combined wealth of Forbes magazine's 25 richest Russians tumbled 62 percent between May 19 and Oct. 6, based on the equity value of traded companies and analysts' estimates of closely held assets they own. The loss is four times larger than the fortune of the world's wealthiest man, Warren Buffett.

Moscow's benchmark Micex stock index declined 61 percent since its peak in May. The global credit seizure, war with Georgia and falling commodity prices led foreign investors to pull $74 billion out of Russia since early August, according to BNP Paribas SA. While Russia's 1998 default and devaluation of the ruble eradicated savings for most of the population, this year's losses are wiping out its richest citizens' fortunes.

``There was a massive transfer of wealth into the hands of the oligarchs in 1998,'' said Mark Mobius, executive chairman of Templeton Asset Management Ltd., which has about $30 billion in emerging market stocks. ``Now it's going the other way.''

United Co. Rusal's Deripaska, 40, the richest Russian on the list, lost more than $16 billion and in the past week ceded stakes in Hochtief AG and Magna International Inc. Chelsea FC owner and Evraz Group SA shareholder Abramovich, 41, lost $20 billion, based on assets excluding property and cash.

Lisin's Losses

The biggest loser has been Vladimir Lisin, 52, an avid hunter and head of Russia's Shooting Club, whose 85 percent stake in OAO Novolipetsk Steel lost $22 billion in value in the period.

Novolipetsk rival Evraz declined 83 percent, shrinking 49- year-old founder Alexander Ambramov's fortune to $2.2 billion from $13.4 billion. Russia's biggest steelmaker, OAO Severstal, also fell, cutting the wealth of chief executive officer and majority owner Alexei Mordashov, 43, to $5.3 billion.

``They should take us all off the Forbes list,'' said Alexander Lebedev, ranked 39th by the magazine in May with $3.1 billion of wealth. Lebedev, 49, who owns 30 percent of state-run airline OAO Aeroflot, said in an interview on Sept. 23 that ``silly'' rhetoric by the Kremlin over the conflict in Georgia was responsible for 40 percent of the stock market's drop in August.

Lukoil, Alfa

OAO Lukoil Chief Executive Officer Vagit Alekperov, 58, saw his 20 percent stake in Russia's second-biggest oil producer decline to $7.2 billion from $19.5 billion. The fortune of Alekperov deputy Leonid Fedun, 52, declined to $3 billion from $8.4 billion. Both men have said they will continue to buy more Lukoil shares.

Dmitry Rybolovlev, 41, who controls OAO Uralkali and owns 20 percent of OAO Silvinit, the country's only potash producers, lost about $12.8 billion, leaving him with $4.1 billion.

Alfa Group partners Mikhail Fridman, 44, German Khan, 46, and Alexei Kousmichoff, 45, ranked seventh, 10th and 17th, respectively, lost at least a combined $12.1 billion.

Alfa's shareholdings include BP Plc's Russian oil venture TNK-BP, mobile-phone operators OAO VimpelCom and Turkey's Turkcell Iletisim Hizmetleri AS, supermarket chain X5 Retail Group and television broadcaster CTC Media Inc.

Spokespeople for companies including Deripaska's Basic Element, Evraz, Nikolai Tsvetkov's UralSib Financial Corp. and Rybolovlev's Uralkali declined to comment on the losses.

Cashing Out

At least one of Russia's wealthiest got out in time.

Mikhail Prokhorov, 43, sold his 25 percent stake in OAO GMK Norilsk Nickel to Deripaska's Rusal for an undisclosed amount in April, just before nickel prices began to slump. The value of that stake plummeted from $13 billion on April 24 to $3.38 billion on Oct. 6.

Prokhorov received $7 billion in cash as part of the Norilsk transaction, the Kommersant and Vedomosti newspapers reported then, citing unidentified people familiar with the deal.

``Are you criticizing me for feasting amid the Black Death,'' Prokhorov joked with reporters in Moscow on Sept. 30, after buying half of Renaissance Capital for $500 million. That was less than a quarter of the value the investment bank had a year ago when VTB Group sought to take it over, according to a Vedemosti report. ``Crisis time is a peak for opportunities,'' Prokhorov said. ``An absolute peak.''

Trading Delayed

Russia's Micex and RTS stock exchanges delayed the opening of trading today on orders of the market regulator. It was unclear when trading would start, a spokesman for Micex said. The RTS won't resume stock trading until ``further notice,'' the bourse wrote in an e-mailed statement.

``You can now buy the free float of the entire Russian energy sector with the market cap of Coca-Cola, and still have change to buy all the Russian banks,'' Merrill Lynch & Co. emerging markets equity strategist Michael Hartnett said in a note to clients today.

The unprecedented loss of wealth may set the stage for a new round of asset redistribution, said Pavel Teplukhin, president of Troika Dialog Asset Management in Moscow.

``We've seen quite a significant inflow of fresh money by our wealthy individuals to acquire at these very attractive levels that we haven't seen since 2003, 2004,'' Teplukhin said in a Bloomberg Television interview on Oct. 9, a day the Micex Index climbed 9.8 percent.

Next Round

The next round of wealth building may be the most intense yet, according to Renaissance Capital. The first came between 1995 and 1998 as Russia's first president, the late Boris Yeltsin, agreed to sell stakes in the nation's biggest industrial assets in return for loans from bankers including Potanin, who helped organize the state bailout.

``It will be a game with bigger stakes than in early 1990s privatizations and the redistribution after the 1998 crisis,'' said David Aserkoff, chief strategist for Russia at Moscow-based Renaissance Capital.

``Oligarchs with cash will be able to use their knowledge of the business and political landscape to find the next billions,'' Aserkoff said in a research report on Oct. 6.

``The market will grow back,'' billionaire Viktor Vekselberg, 51, one of BP Plc's four partners in oil company TNK-BP and founder of Renova Group, told reporters yesterday. ``The only issue is when. I don't think it will be soon.''

To contact the reporters on this story: Yuriy Humber in Moscow at yhumber@bloomberg.net; Greg Walters in Moscow gwalters1@bloomberg.net; Maria Kolesnikova in Moscow at mkolesnikova@bloomberg.net.

Last Updated: October 10, 2008 05:44 EDT

Oлон улсын валютын сангаас хийсэн дvгнэлт, зєвлємж

Инфляци болон эдийн засгийн сvvлийн vеийн тулгамдсан асyудлаар олон улсын валютын сангаас хийсэн дvгнэлт, бодлогын зєвлємжvvд

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Нийтэлсэн: 2008-10-11 14:22:13 , Мэдээний дугаар: #1138781

Монгол улс нь Олон улсын валютын сангийн гишvvнээр 1991 онд элсэн орсноос хойш єнєєдрийг хvртэл тєсвийн алдагдлыг бууруулах, эдийн засгийг тогтворжуулж, єсєлтийг хангах чиглэлээр бодлогын тvвшинд Сангийн яам, Монголбанктай нягт хамтран ажиллаж ирсэн билээ. 2007 оны сvvлийн хагасаас нэмэгдэж, єнєєдрийн байдлаар 34 хувьд хvрээд байгаа инфляци, 2008 оны тєсвийн тодотгол, 2009 оны тєсвийн тєсєл болон эдийн засгийн тулгамдсан асуудлуудын талаар тус яаманд дараах дvгнэлт, зєвлємжийг ирvvлснийг ард тvмний сонорт хvргэхийг зорив.

Хvнсний барааны vнийн єсєлтєєс шалтгаалан инфляцийн тvвшин 2008 оны 6-р сард 30 хувиас давсны зэрэгцээ хvнсний бус барааны инфляци мєн 16 хувьд хvрч єсєв. Хvнсний барааны дэлхийн зах зээлийн vнийн єсєлтєєс гадна тєрийн албан хаагчдын цалинг ихээхэн хэмжээгээр нэмж тєсвийн тэлэх бодлого баримталсан, мєн зээлийн хурдацтай єсєлт vргэлжилсэн хэвээр байсан нь vнийн хєєрєгдлийг бий болгов. Инфляци єндєр байх нь макро эдийн засгийн тогтвортой байдлыг алдагдуулж, єрхийн орлого нэн багатай ард иргэдэд хамгийн хvндээр тусдаг учраас макро эдийн засгийн хатуу бодлого баримтлах нь шинэ засгийн газрын нэн тэргvvнд шийдвэрлэх ёстой асуудал болоод байна.

Тєрийн албанд орон тоог шинээр нэмэхгvй байж ач холбогдол багатай тєсвийн хєрєнгє оруулалтыг багасгахын зэрэгцээ нийгмийн хамгааллын бодлогыг зохих хэмжээнд vргэлжлvvлэх замаар 2008 оны тєсвийн орлого зарлагыг тэнцвэржvvлэх боломж байна. 2007 оны 10-р сараас хойш зээлийн хvv нэмэгдсэн нь зохих ёсны єєрчлєлт хэдий ч инфляцийг тогтоон барихын тулд мєнгєний бодлогыг нэмж чангаруулах шаардлагатай байна.

Мэдээллийн эх сурвалж:Дугаар 38 /486/ http://www.olloo.mn/modules.php?name=News&file=article&sid=1138781

Finance leaders endorse G7 plan to calm markets

Sun Oct 12, 2008 1:35am EDT
By Lesley Wroughton

WASHINGTON (Reuters) - Finance leaders from the International Monetary Fund's 185 member countries on Saturday endorsed a plan by major economies to chart a course out of the credit crisis, hoping the broader support will calm markets.

Egyptian Finance Minister Youssef Boutros-Ghali, who chairs the IMF's policy-steering committee, said the fact that 185 countries, including emerging and developing economies, supported the Group of Seven plan should help restore confidence in financial markets.

"We are committed to the plan of action," Boutros-Ghali said, "This is an essential element for restoring confidence," he added.

The G7 on Friday vowed to take all necessary steps to unfreeze credit markets and ensure banks can raise money, and the IMF warned that concerns about more bank failures was pushing the global financial system to the brink of meltdown.

"This is a systemic crisis and therefore it requires systemic measures," Boutros-Ghali, the new chairman of the International Monetary and Financial Committee, told a news conference.

In a communique, the panel said the size and scale of the crisis called "for exceptional vigilance, coordination, and readiness to take bold action."

The financial crisis has dominated weekend meetings of the IMF and the World Bank, and distracted from Boutros-Ghali's appointment as the first finance minister from an emerging economy to head the IMF panel after years of European dominance.

"The mood in the IMFC was a mood of resolve, of unity, of focus, and of a decision by the membership that this requires cohesion. And that cohesion has been achieved today," Boutros-Ghali told the news conference with IMF Managing Director Dominique Strauss-Kahn.

Strauss-Kahn talked up the significance of the committee's statement supporting G7 action, calling it the first "coordination between advanced and the rest of the world."

Asked whether the G7 plan was enough, Strauss-Kahn said: "In the coming days ... what I expect is that the reaction by the different institutions will be positive enough to unfreeze the different markets and to restore the necessary funding."

TAKING THE REINS AGAIN

He said the committee had agreed the IMF should take the lead in drawing lessons from the crisis and to suggest actions to restore confidence, while also coordinating with other global institutions.

Strauss-Kahn also won member countries' backing for the IMF to activate emergency plans to help the institution respond quickly should a country need help.

Given the fund's universal membership it was the right body for the job, he added.

Strauss-Kahn said the IMF had sufficient resources to help any country in financial peril. Earlier this week he said the fund could also assist major economies, which have traditionally shunned the IMF advice.

In the communique, the IMFC cautioned that the crisis could spill over to emerging economies and pointed to the need for more coordination between advanced and emerging economies.

Earlier in the day, Strauss-Kahn said unprecedented actions by major economies, including simultaneous rate cuts by their central banks, had so far failed to ease panic and fear in markets.

"The measures have not yet achieved the goal of stabilizing markets and bolstering confidence," he said. "Thus, additional moves will likely be needed in the coming months."

He warned that financial conditions were likely to remain very difficult, restraining global growth prospects, while credit conditions should tighten even more.

The IMF has already warned the world economy will slow sharply next year and the recovery will be unusually slow, with Europe and the United States either in or close to a recession.

The immediate challenge for financial policy-makers is to regain control of the financial system, while also nursing economies through the downturn and keeping inflation under control, Strauss-Kahn said.

(Additional reporting by Alister Bull and Emily Kaiser, Editing by Chizu Nomiyama)

Paulson warns emerging markets not immune to turmoil

Sat Oct 11, 2008 2:49pm EDT
By David Lawder

WASHINGTON (Reuters) - Treasury Secretary Henry Paulson said on Saturday that emerging market countries are not immune to the most serious global economic risks in recent memory and must be careful in their policy choices.

In prepared remarks before the International Monetary Fund's steering committee, Paulson also urged the IMF to stay focused on its core missions, including currency surveillance and helping low-income countries avoid a return to debt distress.

Paulson said the financial turmoil, commodity price shocks and housing price declines were causing a "sharp slowdown in economic growth."

"The largest advanced economies are feeling this most acutely. Emerging market countries have made impressive strides in strengthening fundamentals, enabling their economic growth to accelerate and their economies to be better cushioned against external shocks," Paulson said.

"Nevertheless, emerging markets are not immune from the global financial stress, and policy-makers need to be especially attentive to implementing measures to support noninflationary growth, enhance economic resilience, and ensure sound financial systems," he said.

Paulson reiterated that the United States was taking a number of steps to stem the crisis, including the creation of a $700 billion program that would allow the Treasury to purchase mortgage assets and take equity stakes in financial institutions.

He said the IMF must focus on implementing its recent decision to increase exchange rate surveillance.

"This will require IMF staff to apply its considerable technical expertise to make tough judgments and the (IMF) board to ensure IMF assessments are clearly and candidly conveyed," he said.

Paulson said the fund must resist seeking "creative" ways to boost lending for its own sake, and said he would take a skeptical view of any fund proposals to significantly increase the upper limit individual countries are allowed to borrow.

But the United States remains supportive of a short-term stabilization tool, such as a standby arrangement, for low income countries and is open to a well designed liquidity instrument for middle income countries.

He also called for continued cooperation between the IMF and the multilateral Financial Action Task Force to combat money laundering, terrorist financing, weapons proliferation finance and other financial crimes, and urged nations to implement United Nations sanctions against Iranian institutions.

(Reporting by David Lawder; Editing by Tim Ahmann)