The world is on "the cusp of a global recession," but if countries act together, the world economy would recover, IMF Managing Director Dominique Strauss-Kahn said on Thursday.
Problems in the financial markets and in the global economy can be solved "if we act quickly, forcefully, and cooperatively," said the IMF chief.
He told a press briefing ahead of the IMF-World Bank Annual Meetings that the international financial architecture had failed to adapt to globalized financial markets.
World economic and financial authorities are gathering in Washington for the Monday's annual meetings after weeks of turmoil in global equity and financial markets. They will discuss possible further steps to solve the crisis.
Strauss-Kahn said the global financial crisis had been marked by important regulatory and supervisory failures in advanced economies, in the risk management frameworks of major private financial institutions, and in market discipline mechanisms.
The IMF Wednesday unveiled a gloomy forecast for world growth, saying that the world economy is entering a major downturn in the face of the most dangerous financial shock in mature financial markets since the 1930s.
Strauss-Kahn said policymakers should not wait until the end of the current crisis before acting.
The global financial architecture had clearly failed to adapt to globalized financial markets. The architecture's legitimacy and effectiveness had been called into question.
"Legitimacy means that all countries have to be involved in the solution, because they are all involved in the problems," Strauss-Kahn said.
"Effectiveness means we have to use the experience that has been accumulated in the international financial institutions, and that they follow up," he added.
Source: Xinhua
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