WASHINGTON — Losses at financial institutions could approach $4.1 trillion worldwide, the International Monetary Fund said Tuesday as it urged countries to take bolder action to bolster banks or risk a deeper recession.
Capital is needed to cushion against losses, the IMF’s Global Financial Stability Report concluded: An estimated $275 billion in capital for U.S. banks and $600 billion more for European banks.
Report due today
The report and an economic forecast due today will form the basis for a three-day meeting set to begin Friday among finance officials from the world’s richest countries and major developing countries.
The talks are being held as part of the spring meetings of the IMF and its sister lending institution, the World Bank.
Those talks will seek to flesh out the commitments made at a G-20 leaders summit in London last month.
At that meeting, President Barack Obama and the other leaders pledged to boost support for the IMF and other international lending institutions by $1.1 trillion.
Obama wrote to lawmakers asking them to support the pledges he made at the G-20 summit April 2.
Those included a tenfold boost in commitments to an emergency IMF loan fund to $100 billion and support for changes in how the agency is governed to increase the voting power of emerging developing countries.
Flexibility sought
IMF Managing Director Dominique Strauss-Kahn has sought to revamp the agency’s lending programs to make them more flexible.
The IMF has created a new line of credit that it’s willing to extend to countries with solid economic track records without the tough restrictions of normal IMF loan programs. Mexico, Poland and Colombia have petitioned for funds under the program.
The 185-nation IMF, based in Washington, is the globe’s economic rescue squad, providing loans to countries facing financial troubles.
The IMF came under severe criticism during the 1997-98 Asian currency crisis for the types of stringent reforms it imposed on countries receiving IMF assistance.
The agency has shown greater flexibility in the loans it has extended for countries caught up in the current crisis, including those made to Hungary, Latvia, Ukraine, Serbia and Romania.
Its latest conclusions were blunt.
"The current inability to attract private money suggests that the crisis has deepened to the point where governments need to take bolder steps and not shrink from capital injection,” the IMF said.
by the associated press
Capital is needed to cushion against losses, the IMF’s Global Financial Stability Report concluded: An estimated $275 billion in capital for U.S. banks and $600 billion more for European banks.
Report due today
The report and an economic forecast due today will form the basis for a three-day meeting set to begin Friday among finance officials from the world’s richest countries and major developing countries.
The talks are being held as part of the spring meetings of the IMF and its sister lending institution, the World Bank.
Those talks will seek to flesh out the commitments made at a G-20 leaders summit in London last month.
At that meeting, President Barack Obama and the other leaders pledged to boost support for the IMF and other international lending institutions by $1.1 trillion.
Obama wrote to lawmakers asking them to support the pledges he made at the G-20 summit April 2.
Those included a tenfold boost in commitments to an emergency IMF loan fund to $100 billion and support for changes in how the agency is governed to increase the voting power of emerging developing countries.
Flexibility sought
IMF Managing Director Dominique Strauss-Kahn has sought to revamp the agency’s lending programs to make them more flexible.
The IMF has created a new line of credit that it’s willing to extend to countries with solid economic track records without the tough restrictions of normal IMF loan programs. Mexico, Poland and Colombia have petitioned for funds under the program.
The 185-nation IMF, based in Washington, is the globe’s economic rescue squad, providing loans to countries facing financial troubles.
The IMF came under severe criticism during the 1997-98 Asian currency crisis for the types of stringent reforms it imposed on countries receiving IMF assistance.
The agency has shown greater flexibility in the loans it has extended for countries caught up in the current crisis, including those made to Hungary, Latvia, Ukraine, Serbia and Romania.
Its latest conclusions were blunt.
"The current inability to attract private money suggests that the crisis has deepened to the point where governments need to take bolder steps and not shrink from capital injection,” the IMF said.
by the associated press
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