IMF: economic organisations, the decrease will come to 4 trillion U.S. dollars

International Monetary Fund (IMF) in its April 2009 period, “Global Financial Stability Report” in the expected financial tsunami caused by the global financial institutions or asset write-downs will be approximately four trillion U.S. dollars, and the situation is unusually severe.

IMF pointed out that the four trillion U.S. dollars in asset write-downs, the bank will assume two-thirds of which is about 2.7 trillion U.S. dollars. In addition, by the fall in asset prices, all types of non-bank financial institutions during the crisis is also facing tremendous pressure. Held by some insurance companies such as stocks and corporate bonds suffered losses, some pension funds held by the Government bond yields fell. IMF Special Note that, although the majority of these institutions may be prudent to manage risk, but some bear a greater risk, but not fully aware of the potential in front of the pressure that may arise.

In supplement, by the economic turmoil has resulted in finance from foreign markets, the tempo too speedy, aggravated the calamity in emerging market countries. IMF believes that foreign investors and banks combined with the divestment of the disintegration of export markets for emerging market economies led to the financing pressure, the deficiency for urgent attention. Emerging markets is a gigantic appeal for refinancing, it is presumed that in 2009 come seal 1.8 trillion U.S. dollars, bulk of which appeal from businesses, surrounding economic institutions. Although it is difficult to predict, the existing approximation is that in 2009 net flows to emerging markets private finance will be negative, and the future finance inflows is doubtful to return to pre-crisis levels.

Governments should take assesses, IMF furthermore suggested. IMF alerted in its report that, in alignment to bypass worsening of the position, authorities should take a firm principle action. Although the Government to inject added capital into the banking scheme and the activities of some advancement, but in considering with awful liabilities and the banks can not pay for to close down insolvent economic organisations, it should be more efforts.

IMF said that in order to ensure the effective implementation of the restructuring plan, the Government will sometimes take over some or all financial institutions is necessary, but the Government must resume as soon as possible of its private status, and in the bank at the same time restructuring the provision of adequate liquidity. For those banks have been unable to survive, they should be fast so that they shut down.

At the same time, in order to avoid the financial protectionism, led to the crisis on emerging economies have a greater destructive, IMF also recommended that the coordination of policy, to avoid beggar-thy-neighbor approach, which further form a stable global financial system.