IMF Speaks On Credit Crisis

By HARRY DUNPHY The Associated Press

Published: Oct 21, 2007

WASHINGTON - Finance ministers and central bankers should remain vigilant to ensure the smooth functioning of financial markets that have been jarred by a global credit crisis, the International Monetary Fund's policymaking committee said Saturday.

The group also said in a statement that monetary policy of member governments should focus on achieving price stability while keeping a close eye on inflation in light of rising food and oil prices, among other factors.

Problems in the global economy came to a boil when credit markets froze Aug. 9 as fear overwhelmed many investors. Troubles that began in the market for subprime mortgages in the United States spread to many other kinds of debt on international markets.

In an attempt to soothe jittery markets, the IMF statement urged "continued vigilance to maintain well-functioning financial markets."

The ministers said they would continue "to work together to analyze the nature of the disturbances and consider lessons to be learned and actions needed to prevent further crises."

"The turbulence has revealed a number of problems that may be deeper than the specific episode that triggered the tensions," said Italian Economy Minister Tommaso Padoa-Schioppa, the new head of the IMF's policymaking committee.

The head of the IMF, Spain's Rodrigo de Rato, was optimistic despite the recent concerns about the credit market.

"The global economy is expanding from a solid foundation," he said.

The IMF statement said global economic growth was moderating amid disturbances in financial markets, but financial growth in countries with fast-growing economies and "strong fundamentals" continue to support the world economy.