Following the arrest of its Managing Director Dominique Strauss-Kahn in New York on Saturday, the International Monetary Fund said “The IMF remains fully functioning and operational.”

The arrest has raised questions about whether the IMF's role in managing the ongoing debt crisis in Europe would continue unimpeded. The Fund issued a muted statement confirming Mr. Strauss-Kahn's arrest noting that all inquiries would be referred to his personal lawyer and to the local authorities.

Meanwhile, Mr. Strauss-Kahn was remanded to the infamous Rikers Island prison in New York City following the denial of bail over charges that he attempted to sexually assault a hotel maid on Saturday.

Mr. Strauss-Kahn, who appeared “haggard and unshaven” before a New York City district judge following a weekend in prison, was refused bail after state prosecutors argued that he would likely flee to France. “He would be living openly and notoriously in France, just like Roman Polanski,” Chief Assistant District Attorney Daniel Alonso told media

The top economist and potential presidential contender in French politics will wake up on Wednesday in an eleven-by-fourteen-foot cell in the same jail compound that housed Mark Chapman, musician John Lennon's killer. Given the high-profile nature, however, Mr. Strauss-Kahn will be held in protective custody in Rikers' West Facility, one of 10 prisons within the complex. Though it is the smallest facility, the West Facility was said to be “typically used to house prisoners with contagious diseases,” and was thought to be appropriate for Mr. Strauss-Kahn as he will not be permitted any contact with other prisoners “in case he is attacked by other inmates,” reports said.

In the bail hearing earlier on Monday, Mr. Strauss-Kahn's defence attorney Ben Brafman argued that the “battle has just begun,” and it was “quite likely he will be exonerated.” His defence team also confirmed that Mr. Strauss-Kahn had agreed to subject himself to forensic testing. Mr. Strauss-Kahn could face anywhere between five to 25 years in prison, said legal experts.

After Mr. Strauss-Kahn was arrested as he attempted to board a flight to Paris from New York's John F Kennedy airport, Judge Melissa Jackson had rejected his offer of $1 million as bail, along with his offer to wear an electronic tag. Mr. Brafman however suggested that his client might appeal the bail denial.

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