IMF forecasts $1.4 trillion losses for US financial sectorOctober 7th, 2008 - 9:19 pm ICT by IANS
Washington, Oct 7 (DPA) The International Monetary Fund (IMF) warned Tuesday that the US financial sector losses could total $1.4 trillion as the housing crisis at the centre of the turmoil has yet to reach its peak.The IMF, in its annual financial stability report, warned that the rate of US mortgage defaults that sparked the financial crisis has yet to reach its peak, despite a year of homeowners already defaulting on their loans in record numbers.
Banks will go under, and financial institutions will face an “inevitable” restructuring period as they battle to raise the capital needed to bolster their own balance sheets, the report said.
But the IMF urged governments in the worst hit countries - mainly US and Europe - to take coordinated action to quell the market instability, set up a better regulatory framework to prevent future collapses and provide surviving banks with the help they need.
“What is needed now is a decisive and coherent international response that is systemic in its nature to ensure that the de-leveraging process remains orderly,” said Jaime Caruana, head of the IMF’s Monetary and Capital Markets Department in a separate statement.
The advice comes as European Union finance ministers agreed Tuesday to raise bank savings guarantees from 20,000 euros ($27,200) to at least 50,000 euros in a bid to quell the concerns of consumers.
The United States raised its own savings guarantees last week from $100,000 to $250,000.
Emerging economies will not be insulated from the financial crisis in industrial nations, the IMF warned.
- Europe agrees to 1 trillion euro fund for new bailout plan - Oct 27, 2011
- Euro on brink of collapse: IMF - Apr 18, 2012
- Greece to receive new IMF aid in July: French PM - Jun 22, 2011
- India's growth projection lowered as global recovery stalls - Jan 24, 2012
- IMF approves another bailout tranche for Greece - Dec 06, 2011
- IMF urges global financial regulatory reforms - Sep 21, 2011
- China's economy on path for soft landing: IMF (Lead) - Jul 25, 2012
- IMF to explore options to combat global economic risks - Jan 18, 2012
- IMF urges euro zone to contain crisis - Mar 02, 2012
- IMF calls for action to handle global crisis - Sep 25, 2011
- Europe should help Greece to avoid crisis: Greek PM - Oct 16, 2011
- IMF warns Italy of downside risks, pushes more reforms - Jul 11, 2012
- Greek default would roil financial markets: US official - Jun 23, 2011
- Eurozone agrees to bail out Spanish banks - Jun 10, 2012
- IMF sees some 'hot spots' in Indian equities markets - Jan 25, 2011