IIF pushes emerging market principles at IMF

WASHINGTON DC – The increasing use of complex financial instruments and the growth of private capital into emerging economies are making global economic growth more and more vulnerable, so says the Institute of International Finance (IIF) in a letter sent last month to Gordon Brown, UK chancellor of the exchequer, in his capacity as chairman of the International Monetary and Financial Committee (IMFC).

The letter notes that sharp declines experienced on capital markets worldwide earlier this year and the current crisis in the US sub-prime mortgage sector: "have signalled prospects of a return to risk aversion" and "created an unusual sense of unease and anxiety amidst prosperity" since "the instruments have not been tested during times of stress."

Moreover, investment in emerging markets has increased from $100 billion in 2002 to more than $500 billion in 2005 and 2006, which the IIF suggests