Despite a slowdown in the US and the slide in the housing market, risks to the global economy have decreased in recent months than what they were six months ago, says Rodrigo de Rato, head, International Monetary Fund (IMF). According to the IMF the problems were US-specific and not expected to spread

De Rato, however, added that global policymakers should remain vigilant, as "global imbalances" - skewed trade and investments which had led to some "questionable lending and borrowing" - were the biggest threats to long-term stability.

He also cautioned that an over-reliance on US consumers to support other economies was unsustainable in the long term.

He said if political leaders did not think of global imbalances as important, or were complacent about financial market developments, it would be more difficult to persuade them to take the action needed to sustain global prosperity. He clarified that the IMF had told China, both publicly and privately, that it would benefit from a more flexible exchange rate.

The US has accused China of keeping its currency deliberately undervalued to keep its exports artificially cheap in global markets. In February, finance ministers from G7 leading industrial nations have renewed pressure on China to relax controls over its currency.