Asia has emerged as a global economic powerhouse but is now faced with policy challenges from rising capital inflows, the International Monetary Fund chief said on Monday.

IMF managing director Dominique Strauss-Kahn also said in a speech at a conference that Asia, which has until now relied heavily on exports for economic growth, needed to boost domestic investment and consumption.

"Major policy challenges include how best to manage the sharp rebound in capital inflows, and the related risks of overheating and credit and asset bubbles," he said in a prepared speech to be delivered at the conference in Daejeon, south of Seoul.

He said the need for Asia to boost its domestic demand has increased with its trading partners, especially advanced economies, entering "a potentially extended period" of lower rates of growth.

At the same conference, South Korean Finance Minister Yoon Jeung-hyun urged the IMF to take steps to help prevent another financial crisis, repeating the country's call for a strengthened network of financial safety nets.

"I believe the IMF has an important contribution to make, by proposing and enacting concrete and realistic measures to strengthen financial safety nets around the globe," Yoon said in a prepared speech.

Yoon said efforts from developing countries were not sufficient to withstand external shocks on increases in volume and high volatility of capital flows.

In June, leaders from the Group of 20 economies pledged to push for agreement on greater voting power for emerging economic powers in the IMF by their next summit in Seoul in early November.