The world's banks need more government intervention and better cooperation to halt a deepening recession and shore up struggling financial institutions, dpa quoted the global financial lobby as saying today. The International Institute of Finance (IIF) said the world's economy will shrink by 1.8 per cent this year - down from its January prediction of a 1.1 per cent contraction that would mark the first since World War II. Charles Dallara, managing director of the IIF, called on the world's leaders meeting in London next month to avoid protectionist moves, double their funding of international financial institutions and nail down a common plan to rescue a financial industry that has yet to be stabilized. "I think it's so important that they find common ground," Dallara said amid signs of a growing rift between the United States and Europe over how aggressively to tackle the economic crisis. Dallara said the only means of rescuing financial firms was for the US government to take all of the trillions of dollars in damaged mortgage-related assets off of banks balance sheets. The IIF is made up of 375 financial institutions around the world.
