The International Monetary Fund said Monday it would require 25 major economies to undergo financial stability exams every five years in a bid to avert global financial crises. Not the least among the 25 is India, widely regarded as Asia's second-fastest growing economy.
The IMF's executive board approved the move to switch from voluntary assessments to mandatory in-depth reviews for the world's top 25 financial sectors, the international lender said in a statement.
The 25 economies were chosen based on the size of their financial sectors and their links with financial sectors in other countries, said the 187-nation institution.
Until now, IMF financial sector evaluations have been voluntary for IMF member countries.
The Fund identified the 25 as the United States, Britain, Turkey, Switzerland, Sweden, Spain, South Korea, Singapore, India, Japan, China, Germany, Australia, Austria, Belgium, Brazil, Canada, France, the Netherlands, Italy, Hong Kong, Ireland, Russia, Mexico and Luxembourg. This group covers almost 90 per cent of the global financial system and 80 per cent of global economic activity, the fund said. It also includes 15 members of the Group of 20 major economies.
"It is a major step toward enhancing the fund's economic surveillance to take into account the lessons from the recent crisis, which originated in financial imbalances in large and globally interconnected countries," the IMF said in a statement. It added that the global banker will assess possible sources of weakness in countries' financial sectors, and evaluate each country's financial stability policy framework and their capacity to manage and resolve a financial crisis.