In an interview with Reuters Tuesday night, IMF chief Dominique Strauss-Kahn said the United States Congress must act urgently and approve the $700 billion bailout plan. He said even if it's imperfect it's better than nothing.
He said Europe needs to develop a plan for their own financial crisis.
All plans of this nature must have effective oversight and a clear objective, he said, along with clarity as to how much money is to be injected and how assets will be dealt with.
He said it is important to keep the general public aware that these plans are in place to restore confidence in markets.
Turning back to the U.S. economy, he said the U.S. economy should recover in mid-2009 and that the current crisis is much less severe than the IMF had predicted 18 months ago. He said should the bailout pass the U.S. will see a "U-shaped" recovery.
On the subject of emerging economies, he said so far the impact of the U.S. crisis has been limited and will remain so unless credit becomes limited, in which case they could suffer a "liquidity shock."
By Megan Ainscow
©CEP News Ltd. 2008