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IMF wants rapid action to end global credit crisis

The IMF called on Thursday for a rapid assessment of the amount of bank losses related to the US housing crisis to help end the global credit squeeze.

"I want to stress in particular that early and focused action to solving valuation problems is critical in moving forward to solve this crisis," IMF spokesman Masood Ahmed said.

The IMF welcomed Wed-nesday's massive coordinated action by five central banks to pump liquidity into the global banking system because it gave "an important signal to markets that these banks are working together to address the international nature of the problem," he told reporters.

Ahmed recalled that the IMF had been saying for some time that the provision of liquidity to ensure the smooth functioning of financial markets is a "high priority."

"With continuing concerns about the extent of credit deterioration, central bank liquidity operations are only one part of addressing the ongoing problems in financial markets," he said.

"Market participants and financial regulators need to keep the focus on solving issues of valuation. This requires active collaboration and coordination by auditors and supervisors and we believe that early recognition of losses is necessary and helpful," the IMF spokesman said.

Financial institutions should raise capital and avoid reducing balance sheets sharply in the current circumstances, he warned.

"Supervisors need to exercise judgment and not mechanically argue for stronger capital cushions," he said.
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