IMF chief warns of global financial shock

Updated October 12, 2008 23:50:18

Global meltdown: International Monetary Fund chief Dominique Strauss Kahn says concerns about the viability of big US and European banks could send the world's financial system into meltdown. [AFP]

The head of the International Monetary Fund is warning the global financial system is on the verge of meltdown.

"Intensifying solvency concerns about a number of the largest US-based and European financial institutions have pushed the global financial system to the brink of systemic meltdown," IMF managing director Dominique Strauss-Kahn told the IMF annual meeting in Washington.

He noted that the US and European authorities have taken "extraordinary measures" in an effort to stem the crisis but they "have not yet achieved the goal of stabilizing markets and bolstering confidence.

"Thus, additional moves will likely be needed in coming months."

North America Correspondent Michael Rowland the grim warning came after a meeting of world finance ministers convened by US President George Bush.

Mr Bush says financial crisis requires a serious global response.

"We will stand together in addressing this threat to our prosperity. We will do what it takes to to resolve this crisis. And the worlds economy will emerge stronger as a result," he said.

The finance ministers from the G20 group of rich and emerging nations are gathering at an emergency meeting to find ways to combat the growing crisis.

Australian talks seek solutions

In Australia, talks are continuing in the capital, Canberra at a special meeting of the Prime Minister and the government's top economic advisers on Australia's response to the global financial crisis.

One of the issues on the agenda is the limit on individual savings the government is prepared to guarantee.

A spokesman for the Prime Minister Kevin Rudd has confirmed the talks are examining the Financial Claims Scheme and the possible broadening of the $AU20,000 limit on guaranteed bank deposits.

The spokesman for Mr Rudd says the meeting's also looking at the implications of the financial crisis on employment and growth.

The Treasurer Wayne Swan will be joining the talks again today through a phone hook-up from the G20 finance ministers meeting in Washington.

Also involved are the Deputy prime minister Julia Gillard, the finance minister Lindsay Tanner, the families minister Jenny Macklin and the heads of Treasury, the Finance Department and the Department of Prime Minister and Cabinet.

Retirees protest lost savings

In Singapore about 600 angry protestors who lost their savings because of the global financial turmoil have urged the central bank to help them recover their money.

Many of the protestors who gathered in the city were retirees.

They'd invested their life savings in financial products linked to collapsed US investment bank Lehman Brothers and other institutions.