The International Monetary Fund pitched its case Friday for becoming a global central bank, a function that would require a hefty capital injection but could help even out imbalanced and unsustainable growth patterns.

Dominique Strauss-Kahn, the IMF's managing director, said the organization has been given a "new mandate" to serve as global lender of last resort and signaled that pledges of international cooperation made last month by global leaders in Pittsburgh could be amplified.

"I believe we can achieve even more," he said at a speech in Istanbul, where the IMF is holding its annual meeting.

Decisions made at the Group of 20 summit in Pittsburgh gave the IMF its new mission, and also bolstered its legitimacy and effectiveness by committing to granting emerging economies a greater voice in the governance of the multilateral organization, Strauss-Kahn said.

The world needs another burst of global cooperation like that shown 60 years ago when the IMF and World Bank were created, he said, adding that Istanbul could become shorthand for what Bretton Woods stood for in the postwar era.

"The international monetary system must be more stable, and anchored by a global lender of last resort," he said, outlining his vision for the IMF.

Such an anchoring role could help counter dysfunctional trends such as the fourfold rise in foreign-reserve holdings to $8 trillion - most of them in emerging economies, led by China - since the late 1990s, Strauss-Kahn said.

A well-capitalized IMF could provide credible insurance against the fears of sudden stops in private capital flows that spurred many emerging economies to "self-insure" themselves and amass huge reserves, he said.

There is a symmetrical risk today because the abundant liquidity central banks have pumped into global financial markets may spur investors to pile into emerging markets seeking higher returns, only to suddenly rush for the doors when interest rates are hiked in advanced economies, Strauss-Kahn said.

Excess reserves are costly for countries that amass them, because they channel funds away from investments in education or infrastructure, which are especially needed in poorer, emerging economies, he noted.

He also observed that they "complicate" monetary and exchange-rate policy and thereby contribute to widening global imbalances.

The costs of such an inefficient strategy - both in terms of unachieved welfare and today's violent rebalancing of the global economy - show "there is clearly a need for reliable emergency financing," Strauss-Kahn said.

However, the IMF shouldn't be designated a global regulator of the banking system, a task that instead fits the newly created Financial Stability Board, he said.

That division is rapidly eroding in many advanced economies. The Federal Reserve and the European Central Bank both appear set to obtain greater regulatory and supervisory powers alongside their monetary policy duties, an extra mandate some critics say could lead to a conflict of interest or purpose.

The IMF refashioning itself as a central bank poses some intriguing questions, such as whether the Special Drawing Rights - a sort of proxy currency - that the fund issued in force recently would become tantamount to a tradable debt security that the IMF could target in its own version of money-market operations.

It also isn't clear what would guarantee the IMF's balance sheet in an extreme case, because it lacks the taxing authority of governments.

But the global credit crisis and ensuing recession have pushed numerous such conundrums to the fore.

Indeed, Strauss-Kahn said the overriding goal of his proposed reform is to avoid the boom-and-bust cycles that have marked recent decades. Yet only three years ago, policy makers were hailing the "great moderation" as having helped tame the business cycle and spur an unusually long period of economic expansion.

The shaky foundations of that debt-fueled growth are now clear, requiring vast publicly funded efforts to prop up economies.

"Unemployment is certain to get worse," Strauss-Kahn said. Governments should keep their stimulus plans in place until it is clear that unemployment can be steered lower, he added.

While acknowledging that so-called exit strategies might differ across countries in terms of timing and sequencing, he urged the adoption of "common principles for the unwinding of crisis-support measures."