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IMF head calls for concerted action on credit crunch

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Date: Monday 07 Apr 2008

LONDON (ShareCast) - Concern about the possible impact of the credit crunch has prompted the head of the International Monetary Fund to call for co-ordinated action from governments to help ease the crisis.

"I really think that the need for public intervention is becoming more evident. The crisis is global," Dominique Strauss-Kahn, the IMF's managing director said in an interview with the Financial Times.

Strauss-Kahn added that the crisis spread could spread to developing countries such as China and India if not contained and was not just an issue for the US.

Public intervention would provide a third line of defence by tackling the housing and credit problem directly, he said.

“Effort has to be made on loan restructuring. With respect to the banks, if capital buffers cannot be repaired quickly enough by the private sector, use of public money can be examined.”

The former French economic minister added action could take the form of intervention in areas such as housing , banking and the securities industry and could provide a "third line of defence" after fiscal and monetary policy.

Both the IMG and World Bank meet this week, with the main topic of discussion ways to tackle the credit crunch.