IMF's Strauss-Kahn Urges More Action to Calm Markets

-- The U.S. and European nations may need to take additional steps to stem the global financial crisis, International Monetary Fund chief Dominique Strauss-Kahn said.

Speaking in Washington after a meeting of the lender's steering committee, Strauss-Kahn praised the steps taken yesterday by Group of Seven finance ministers to address the credit crisis and the plunge in stocks.

``The fund has asked for weeks, if not months, for more coordination in action,'' Strauss-Kahn said at a press conference. ``It is important that the first coordination took place today when emerging-market economies and low-income countries agreed with the principles and actions decided by the G-7 yesterday. The crisis is not a crisis only limited to advanced countries.''

The G-7 ministers pledged to take ``all necessary steps'' to unfreeze credit and money markets while vowing to prevent the collapse of major banks.

``This is a very important thing, both for people working in markets and for simple citizens, that no one is going to allow an important financial institution to fail,'' Strauss-Kahn said.

Demand for IMF assistance may rise from developing countries struggling to cope with the collapse in lending and of equity markets worldwide. Speaking earlier to the lender's steering committee, Strauss-Kahn said interest-rate cuts, bank- deposit guarantees and plans to purchase toxic assets had so far failed to end the panic.

Statement, Policies

``These measures have not yet achieved their goal of stabilizing markets and bolstering confidence,'' he said in a statement to the International Monetary Fund Committee, which guides the policies of the lender. ``Thus, additional moves will likely be needed in the coming months.''

Earlier this week the IMF forecast the slowest growth in advanced economies since 1982. The fund said the global economy was likely to start recovering only in the second half of 2009.

Today Strauss-Kahn said there are ``major downside risks'' even to this pessimistic outlook.

Strauss-Kahn praised the U.S. fund to buy troubled assets from banks and said that public money would also be needed to rebuild the capital base of the banks.