Cleaning up banks crucial for economy-Brazil finmin

Sat Apr 25, 2009 10:48pm BST
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By Walter Brandimarte

WASHINGTON, April 25 (Reuters) - Brazil on Saturday called on the United States and other developed countries to clean up their financial systems to allow for a sustained recovery of the global economy.

In Washington, Brazil's Finance Minister Guido Mantega said the global financial system "remains under stress and the issue of toxic assets has not been solved," despite some recent positive economic signs.

"This is a key issue. If the United States and other countries that have banks with toxic assets do not clean up their financial system, this crisis will last for a long time," Mantega told reporters on the sidelines of the IMF/World Bank meetings in Washington.

Some initial positive signs were already visible, Mantega said, mentioning a tightening in interbank rate spreads, a slight recovery in commodity prices, and a positive performance in global equity markets.

"But that does not mean that the crisis is over or that countries are not going to be in trouble," he said.

Those recent improvements, according to the minister, were to a great extent the result of coordinated actions decided by G20 countries last month.

But several G20 resolutions are still to be implemented, Mantega said, urging countries to swiftly make new capital available to the International Monetary Fund.

Brazil, Russia, India and China are also willing to provide capital to the fund, but that will depend on the development of new capitalization instruments by the IMF, the minister reiterated.

 
 
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