French April Business Confidence Rises More Than Expected

The International Monetary Fund (IMF) warned Tuesday that total losses from the ongoing global economic downturn could reach $4 trillion and the global financial system "remains under severe stress".

Though the IMF had predicted total losses from the credit crunch to hit $1 trillion a year ago, the lender in its latest Global Financial Stability Report (GFSR) estimates losses incurred by banks alone would be over $2.7 trillion.

"In this GFSR, estimates for write-downs have been extended to include other mature market-originated assets and, while the information underpinning these scenarios is more uncertain, such estimates suggest write-downs could reach a total of around $4 trillion, about two-thirds of which would be incurred by banks," the IMF said in its Global Financial Stability Report.

The IMF report blamed the worsening base-case scenario for economic growth for losses suffered by banks, adding that the shrinking economic activity has put further pressure on banks' balance sheets as asset values continue to degrade, threatening their capital adequacy and further discouraging fresh lending.