hi a preemptive* move aimed ar helping it spat crises in emerging economies sooner, the Interna tional Moneum Fund said lluirs-day it would set up a new Interna tkmal Capital Markets depait mrnt.

I he widely-expected move is hoped to help the Washington based lender spot hquiditv crunches in countries like Turkes and Argentina before they have a crippling effect that would requite bailouts costing billions ol dollars.

Ever since (he Asian financial crisis, which started in Thailand in 1997 before locking the legion and spreading as far afield as Brazil and Russia. IMF critics have accused the lender of being too slow to spot problems.

I he new department, along with a rati of earlier reforms, also addressees a key concern ol new US treasury Secretary Paul O'Neill, who is keen to see the lund develop into a more proactive organization than it has been in the past.

Ihe fund said in a statement that the new department will offer it greater surveillance of capital markets around the world allowing ii to nor just spot problems

earlier, but also to manage crises when they do occur.

I he new unil will take stull and operations front three existing IMF departments. New responsibilities will include developing closer relationships with major commer cial banks.

Wall Street traders often complain that the IMF is too i.uelied and does trot have a firm grasp on the realities of the day-to-day vagaries ol financial markets.

I he new department will also work on conceptual work about improving rhe international financial system and access to capital markets by member countries.

"I see (his Department as a vital part of (he ongoing efforts to strengthen (he international fi nancial architecture, and in particular to strengthen the lurid's role in crisis prevention." IMF Managing Director Horst Koehler said in a statement.

"With this move, the fund is sending a clear signal (hat it is serious about its commitment to being a center of excellence for work on financial markets issues," he added.

Koehler said he hopes to ap point a head for the unit with the appropriate professional background and experience as soon as

possible.

I lie move follow s (he n com mendailon. of an independent p.aicl i oinmissimied by Korhlei io see how (he hind could improve Us understanding of capital mar kels.

Earlier this week, O'Neill al-luded to the IMI doing a better job spotting problems.

"II we in the world do our work well, that there will be less firefighting anti more polishing (he Ilie engines because we will an-ticipate difficult situations in countries that could result in a financial unwinding ol affairs in a particular country," O’Neill said.

Indeed, (he straight-talking I leasurv Secretary said that in the Iasi 20 years, few financial crises came as much of a surprise to people who pay attention to such matters.

"And that tells me that il is possible with the light kind of intelligent application of ideas to antici pate and to take action to make sure that we don't have a fire.’ he said.

Ihe new department should make O'Neill feel more confident that the IMF is at least covering .ill the bases and that if a crisis does occur, that it made a full effort to spot it.