Clean up banking system, for global recovery says IMF managing director

24 April 2009

Dominique Strauss-Kahn, managing director of The International Monetary Fund (IMF) has said the US and Western Europe need to take urgent steps to reform their banking systems soon for actual global economic recovery to commence or risk prolong world recession.

Speaking in Washington before the G20 finance ministers' meeting, Dominique Strauss-Kahn said that G20 leaders at the London summit had assured to fix up their banking systems, though progress had been made, it was not enough.

Strauss-Kahn added that cleaning the mess in the banking systems of the rich world was the most significant goal, for the global economy to recover and more steps were needed to organize problems related to bad loans.

Strauss-Khan cautioned that yet there was "long months of economic distress" to come and the crisis is far from over."

He added that the banking crises reflected delayed decisions resulted in setbacks in recovery.

"All the experience we have of past banking crises, and the experience this institution has, is that you never recover before you have completed the cleaning up of the balance sheet of the financial sector, decisions postponed, delays recovery," he said.