IMF welcomes credit crunch efforts

WASHINGTON (Dow Jones/AP) – The International Monetary Fund on Thursday welcomed the joint effort launched by the U.S. Federal Reserve and four other central banks to help financial markets avoid paralysis related to the credit crisis.

Addressing reporters in a regular briefing, IMF Director of External Affairs Masood Ahmed repeated the fund’s view that the provision of liquidity is a ”high priority” to assure that markets function smoothly.

On Wednesday, the Fed, along with European, British, Canadian and Swiss monetary authorities, unveiled measures designed to lubricate credit markets and prod more lending by banks. The Fed will provide up to $40 billion in special loans over the next eight days, funds that will carry lower-than-usual interest rates and that can be backed by a wide range of collateral.

”We welcome yesterday’s actions … because they give an important signal to markets that these banks are working together to address the international nature of the problem,” Ahmed said.

But he said the liquidity operation is just one part of a needed solution to ongoing credit woes.

”Early and focused action to solving valuation problems is critical in moving forward to solve this crisis,” Ahmed said.

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