IMF warns of financial meltdown
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The IMF has warned of a global financial meltdown (Reuters)
The head of the International Monetary Fund (IMF) is warning the global financial system is on the verge of meltdown.
The comment came as world finance ministers continued a round of crisis meetings in Washington.
"Intensifying solvency concerns about a number of the largest US-based and European financial institutions have pushed the global financial system to the brink of systemic meltdown," IMF chief Dominique Strauss-Kahn said.
The grim warning came after a meeting of world finance ministers convened by US President George Bush.
Mr Bush says financial crisis requires a serious global response.
"We will stand together in addressing this threat to our prosperity," he said.
"We will do what it takes to resolve this crisis, and the world's economy will emerge stronger as a result."
Australian Treasurer Wayne Swan will take part later this morning in an emergency meeting of the G20 group of rich and emerging nations.
Confidence has been in short supply and panic has swept through global markets, driving stocks to a five-year low on Friday and prompting banks to hoard cash.
That has choked off lending to businesses and households, threatening to turn a global economic slowdown into a dangerously deep recession.
US Treasury Secretary Henry Paulson said risks to the global economy were "the most serious and challenging in recent memory."
Europe
Meanwhile, French President Nicolas Sarkozy and German Chancellor Angela Merkel said they had "prepared a certain number of decisions" to present at a Sunday meeting of European leaders as they work feverishly to restore blocked credit markets to working order.
An emergency meeting of euro zone leaders on Sunday will discuss a bank rescue package, taking a British initiative to guarantee lending between banks as a reference point, a source close to the French presidency said.
Mr Sarkozy said euro zone countries were working on a joint solution, but declined to provide specifics. He planned to meet with British Prime Minister Gordon Brown shortly before Sunday's euro zone gathering.
Britain's rescue plan, launched last week, makes available 50 billion pounds of taxpayers' money for injection into its banks and, crucially, calls for underwriting interbank lending, which has all but frozen around the globe.
Germany was also considering injecting capital into its banks, Ms Merkel said.
-ABC/Reuters
