IMF Says Current Market Volatility Is Manageable

Source : The Business Times, August 11, 2007

WASHINGTON - Sharp swings in world financial markets have yet to challenge the stability of the system and prompt central bank action ought ensure an orderly adjustment, the International Monetary Fund (IMF) said on Friday.

'We continue to believe that the systemic consequences of the reassessment of credit risk that is taking place will be manageable. The fundamentals supporting strong global growth remain in place,' the IMF said in a statement.

'The IMF is monitoring these developments closely, including cross-border impacts, in the context of our broader mandate and responsibilities for the international monetary system,' it said.

Evidence that US sub-prime mortgage problems have spread to Europe sent stock markets tumbling on Thursday and central banks have since injected over US$320 billion into the banking system to protect liquidity and shore up confidence.

The IMF said a re-pricing of credit risk currently underway was a healthy correction and should not lead to a more serious market crash, thanks to timely action by central banks. -- REUTERS