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Carstens promises to boost IMF economic oversight

Agustin Carstens, the only person standing between French Finance Minister Christine Lagarde and a coronation as the next head of the International Monetary Fund, has told the IMF's executive board that he would seek to boost the institution's ability to carry out economic surveillance.

"The fund failed profoundly in anticipating the recent financial crisis," Mr. Carstens said in a statement Tuesday to the IMF's 24-member executive board, which interviewed Mexico's central bank Governor for the post vacated last month by Dominique Strauss-Kahn. "Insufficient resources devoted to surveillance and an incomplete understanding of financial sector issues most assuredly played a part."

Mr. Carstens is a long shot for the job. Ms. Lagarde locked up support from the European Union before the nomination process was even complete. The board rejected an 11th-hour entry by Bank of Israel Governor Stanley Fischer because his age exceeded the 65-year-old maximum allowed under the fund's bylaws. Mr. Carstens has picked up support from some smaller Latin American nations, but Brazil, the region's biggest economy, has remained silent on his candidacy.

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China and India also have remained neutral in the competition, a blow to Mr. Carstens, who has sought to portray himself as the candidate of emerging markets. He did so again Tuesday, reiterating that he would seek more chairs for developing countries on the IMF's executive board and that he would ensure increased representation from those nations among the fund's senior staff.

"For its policy recommendations to be heard accepted and implemented, it is vital that the fund be perceived as unbiased and apolitical," Mr. Carstens said in his statement to the board. "By unbiased I mean that evenhandedness among members prevails, that there are no regional biases and that country voice and representation are well balanced."

Mr. Carstens met individually with IMF board members Monday ahead of his appearance in front of the entire executive board Tuesday. Ms. Lagarde gets her turn to meet IMF officials Wednesday, and will be subjected to a full-board interview on Thursday.

Shakour Shaalan, the dean of the executive board, said in a statement Monday that the board will convene early next week to choose between Ms. Lagarde and Mr. Carstens, "with the aim of completing the selection process by June 30."

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About the Author
Senior fellow at the Centre for International Governance Innovation

Kevin Carmichael is a senior fellow at the Centre for International Governance Innovation, based in Mumbai.Previously, he was Report on Business's correspondent in Washington. He has covered finance and economics for a decade, mostly as a reporter with Bloomberg News in Ottawa and Washington. A native of New Brunswick's Upper St. More

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