CGD's event with IMF Managing Director Christine Lagarde was covered by the Wall Street Journal.
From the article:
International Monetary Fund boss Christine Lagarde Tuesday warned that financial-stability risks have returned to the global economy with a vengeance, fueling "great uncertainty" for the world economy.
Lagarde urged European policy makers to take decisive steps to break free of the crisis, including "very accommodating" monetary policy, direct injection of the region's bailout funds into weak banks, and where possible, growth-friendly policies.
"Tensions are on the rise again and financial-stability risks have once more move front and center," the IMF managing director said in prepared remarks for a speech at the Center for Global Development.
"Great uncertainty hangs over global prospects," she said.
Germany, Europe's economic powerhouse, has opposed using Europe's bailout funds for direct recapitalization of banks, including in Spain where the IMF said the financial industry needs billions of euros to stay afloat. Instead, Berlin wants to lend Madrid the cash, which economists say would push up the country's debt burden and could fuel market concerns about the ability of the government to pay its obligations.
Lagarde said developing countries should prepare for a potential worsening of the crisis by rebuilding buffers against further outbreak of Europe's woes. "Those with fiscal space should prepare to use it, especially if conditions continue to deteriorate," she said.
Lagarde also said countries should tax carbon-dioxide emissions to help limit human-generated greenhouse gases thought to contribute to a change in the earth's climate and to raise revenues in difficult budget times. For example, she said the U.S. could raise over $1 trillion in new cash over a decade if it implemented a $25 a ton carbon tax. The head of the IMF also said there should be international aviation charges for emissions to help developing countries pay for strategies meant to protect against impacts from potential climate changes.
The head of the IMF also said growth policies should ensure they are inclusive. "Without this, the social threads that bind society together can rip apart, with devastating economic consequences."