Reform of the International Monetary Fund (IMF) is "absolutely necessary" for IMF to exercise the great authority needed to prevent and resolve new crises in the 21st century, according to a group of senior world finance and central bank officials.

Reform of the world financial system with the IMF at the center was one of the main topics in a series of meetings this spring, including the Sixth Meeting of the Manila Framework Group, which concluded in Hong Kong Monday.

The group with 14 member economies was set up in November 1997 after the eruption of the Asian financial crisis. It meets twice a year to discuss issues affecting financial stability in the region. In the two-day meeting, the group members exchanged views on the recent efforts to streamline the IMF's financing facilities and on the work to better involve the private sectors in crisis prevention and resolution. They also discussed the need to review the IMF's quota allocation in order to better reflect the economic realities of the world today.

Japanese Vice Finance Minister for International Affairs Haruhiko Kuroda said that greater attention should be paid to large-scale and abrupt capital movements when conducting IMF surveillance and formulating its programs.

Kuroda also said that the IMF's involvement should be limited in structural policies that are directly linked to solving crises. He suggested that emphasis should be put on enhancing IMF's transparency and improving its decision making procedures.

The financial officials believed that as the role of private capital markets in meeting the funding needs of developing countries and emerging economies has increased in importance, it is vital to review the function of the IMF basically in the direction of promoting or catalyzing access to private financial markets.

It is clear that the IMF will have to maintain or even strengthen its function as a kind of international "leader of last resort" in certain cases such as a crisis caused by temporary liquidity shortage, they said.

The officials believed that despite the fact that many Asian countries have emerged as important economic powers over the past 50 years since the founding the IMF, the voting share and Board representation of the Asian countries have been extremely limited. On the other hand, 37 percent of the voting power in the IMF belongs to Executive Directors from Europe. Eight of the 24 Executive Directors come from Europe, and seven of these eight represent a single economic union, they said.

"We believed that the member countries of the IMF urgently need to consider the redistribution of quotas," Kuroda said. The group also urged the continuation of the work to improve the stability and functioning of the international financial system, with continuing close cooperation between industrial economies and emerging market economies.

They recognized the importance of monitoring and understanding cross-border capital flows and the resulting stock positions. The group called for greater cooperative efforts by individual economies and the international financial institutions to improve the frequency, timeliness and comprehensiveness of data releases.