Thread: IMF urges rapid, coordinated international response to finan

IMF urges rapid, coordinated international response to financial crisis

• US banking losses estimated at $1.4 trillion
• Strauss-Kahn: 'Time for piecemeal solutions is over'Ashley Seager

guardian.co.uk,
Tuesday October 07 2008 14:19 BST

The International Monetary Fund today added its weight to the growing calls for a comprehensive and coordinated international response to the global financial crisis, which it says has become disorderly and more damaging than it previously thought.

In its latest twice-yearly Global Financial Stability Review, the Washington-based institution dramatically raised its estimate of losses to the US banking system to around $1.4 trillion (£800bn), 45% up from the $945bn it estimated in April and reaffirmed just two months ago.

It also estimated that the major global banks need to raise some $675bn in new capital in the next few years.

The IMF report was released as shares in Britain's banks plunged once again, following emergency talks with the government last night over a possible injection of billions of pounds of taxpayers' money into the banking sector.

The IMF's managing director, Dominique Strauss-Kahn, said the report "shows how serious a crisis we currently face".

"The time for piecemeal solutions is over. I therefore call on policymakers to urgently address the crisis at a national level with comprehensive measures to restore confidence in the financial sector. At the same time, national governments must closely coordinate these efforts to bring about a return to stability in the international financial system."

He spoke as European finance ministers were meeting in Luxembourg to try to thrash out some sort of response to the growing financial emergency, and looked likely to raise depositor protection to €100,000 (£78,000).

Jaime Caruana, head of the IMF's monetary and capital markets department, which authored the report, said: "The global financial system has undergone unprecedented turmoil in the last few months, and the situation has worsened considerably since spring."

He welcomed that countries were starting to discuss comprehensive international solutions, but added: "Concrete actions, however, are needed to tackle insufficient capital, falling asset valuations, and a dysfunctional funding market. Such a comprehensive approach, if consistent among countries, should be sufficient to restore confidence and the proper functioning of markets, and avert a more protracted downturn in the global economy," he added.

The IMF noted that the United States remained the epicentre of the financial crisis, with its housing market continuing to decline and a wider economic slowdown contributing to a further deterioration in the quality of existing loans.

But it warned that Europe too faced problems because many of its own housing markets were also in retreat.

Drawing on its experience of earlier crises, the IMF recommends that national authorities consider five ways to help restore confidence in what it calls "these exceptional circumstances":
• employ measures that are comprehensive, timely, and clearly communicated
• aim for a consistent and coherent set of policies to stabilize the global financial system across countries
• ensure rapid response on the basis of early detection of strains in order to contain systemic repercussions
• assure that emergency government interventions are temporary and taxpayer interests are protected
• avoid losing sight of the objective of a more sound, competitive, and efficient financial system going forward.

http://www.guardian.co.uk/business/2008 ... editcrunch

We dont need any help from the IMF, who wants a "COMPREHENSIVE" solution to the United States financial problem. STAY OUT OF OUR BUSINESS! WE COULD USE LESS INTERFERENCE FROM GROUPS LIKE THE IMF AND THE U.N.

Anytime I hear "comprehensive" or "global" I cringe.