Global economic instability stemming from credit-market turmoil in the U.S. is ``likely to be protracted,'' the International Monetary Fund said five months after predicting little chance of a ``major dislocation.''
``The potential consequences of this episode should not be underestimated,'' the IMF said in its Global Financial Stability Report released today in Washington. ``Credit conditions may not normalize soon, and some of the practices that have developed in the structured credit markets will have to change.''
The worst housing slump in 16 years is contributing to a surge in foreclosures that's slowed U.S. economic growth and prompted the Federal Reserve to lower interest rates last week. The tightening of credit has made it harder for banks worldwide to raise cash. U.K. lender Northern Rock Plc last week asked the Bank of England for emergency funding.
Here's a Link to the Report (PDF)
