Mumbai: The International Monetary Fund (IMF) board will consider a proposal to sharpen its monitoring over the global economy, including evaluation of the exchange rate policies of member countries.

IMF member countries had endorsed an increased role for the fund in policing the global financial system reshaped by trade and financial globalisation and the rise of China and India .

The IMF board, at it''s week-end meeting, will seek to find agreement on a revision of its so-called 1977 decision on surveillance over exchange rate policies that guides IMF surveillance on exchange rate policies.

IMF managing director Rodrigo Rato told a conference in Washington on June 12 that the revision of the 1977 rule was an opportunity for the membership to agree on the IMF''s role. He said a major flaw of the 1977 decision was that it said nothing about policies other than exchange rates.

"Exchange rates are not the whole story. Balance of payments problems can come from many sources, not just ''wrong'' exchange rates," Rato said.

"And it is not always exchange rates that need to change. Sometimes it is domestic policies that need to change to make an exchange rate sustainable." Rato said it was important the IMF was regarded by all members as a trusted advisor and that its analyses and advice be even-handed and candid at the same time.

"The IMF must be trusted to give even-handed advice and fair representation to all of its members," he said, adding, "We must meet this duty in our surveillance."

Some emerging market countries have, however, urged that the sharpened surveillance should not amount to meddling in domestic affairs of countries and its advice should not favor one country over another.

The IMF''s role in monitoring currencies has been thrown into the spotlight by the dispute between the United States and China over the value of the Chinese yuan, which US lawmakers and businesses say is undervalued.

The United States has argued that the IMF should "judge" whether the yuan is fairly valued and should play a stronger role in ensuring that trading nations do not manipulate currency values to gain a trade advantage.

By revising the 1977 decision, member countries hope the IMF will become a more effective global policeman that will enable it to spot a financial crisis before it happens.