IMF says global economic crisis requires strong action, cooperation

The financial crisis facing the world economy demands "strong action" and "close cooperation" among the world's financial powers, the International Monetary Fund said today.

"The global crisis has to be addressed with a global view and by strengthening the role of multilateral institutions," Tommaso Padoa-Schioppa, chair of the the International Monetary and Financial Committee (IMFC), the IMF's top policy-making body, told reporters in a briefing this afternoon.

In its joint statement, known as the communique, the IMFC said that "policymakers should continue to respond to the challenge of dealing with the financial crisis and supporting activity, while making sure that inflation is kept under control."

US economic stimulus should help limit the downside risks to growth, the IMFC said, while "monetary policy should continue to aim at medium-term price stability, while responding flexibly to signs of a more pronounced and prolonged economic downturn."

The IMFC statement welcomed the cooperation of the major central banks in helping to stabilize the financial markets. It called on major financial institutions to declare their losses and raise new capital promptly to help rebuild market confidence.

In a laundry-list of other recommendations, the IMFC called for "safeguarding" medium-term deficit reductions in the US; product and labor-market reforms in Europe; more structural reforms in Japan; addressing supply bottlenecks in oil-exporting countries; and, finally, "reforms to boost domestic consumption in emerging Asia, together with greater exchange rate flexibility in a number of surplus countries" corbett.daly@thomson.com+tfn.newsdesk@thomson.com+dennis.moore@thomson.com dem/wash/wash

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