Property, Mortgage & Insurance News from the Best Deal 4 U

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Credit Crunch

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Monday, April 7, 2008 10:06:47

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Tackling the credit crunch requires government intervention at a global level, the head of the International Monetary Fund (IMF) has said.

The need for public intervention was "becoming more evident", Dominique Strauss-Kahn told the Financial Times.

Authorities have pumped liquidity into markets but, besides bailing out banks such as Northern Rock, have not intervened in financial systems.

The securities market and housing sector could get more support, he said.

This, along with more intervention in the banking sector, would offer a "third line of defence", Mr Strauss-Kahn told the newspaper.

The comments come ahead of a gathering of world financial leaders at the IMF's spring meeting in Washington DC.

Justin Urquhart Stewart of Seven Investment Management said the move proposed by the IMF would need more co-ordinated and effective work between governments.

"We've gone from the idea of the banks just providing access to extra cash, to intervening on odd occasions, then to the final line when were actually saying we're going to have to stand behind this and formally intervene overall in the market to support it," he told the BBC.

"Rather than just waiting for individual banks to go wrong the weaker banks will need further help, and it's going to be more than just access to liquidity."