IMF's Lagarde proposes 'rainy day fund' for eurozone

International Monetary Fund (IMF) Managing Director Christine Lagarde on Monday proposed creating a "rainy day fund" for the eurozone to help cushion members of the currency union in future economic downturns.

In a speech in Berlin, Lagarde hailed a "sustained and broadly shared upswing" in the global economy.

"But there are other, forceful headwinds threatening," Lagarde added. "Think of the rise of populism and the short-sighted siren call of protectionism."

For the eurozone to prepare for the next economic downturn, she urged its members to develop a modernized capital markets union, an improved banking union and to move towards greater fiscal integration, starting with a central fiscal capacity.

Such a fiscal tool would reassure investors, Lagarde said.

Her proposed rainy day fund would see eurozone countries make contributions each...