IMF chief warns of ‘lost decade’

International Monetary Fund chief Christine Lagarde warned yesterday the world risked plunging into a “downward spiral” of financial instability and urged Asian economies to be on their guard.

International Monetary Fund chief Christine Lagarde warned yesterday the world risked plunging into a “downward spiral” of financial instability and urged Asian economies to be on their guard.

Lagarde said Asia was not immune to problems currently sweeping the eurozone, as she began a two-day visit to China likely to focus on the deepening debt crisis in Europe.

“If we do not act together, the economy around the world runs the risk of a downward spiral of uncertainty, financial instability,” she said at the International Finance Forum in Beijing.

Lagarde held talks with Chinese central bank governor Zhou Xiaochuan on the “global economic situation”, the People’s Bank of China said in a brief statement.

Foreign ministry spokesman Hong Lei said Lagarde would also meet with “state leaders” but did not specify who they would be.

Any discussions are expected to touch on China’s possible contribution to a bailout fund -- the European Financial Stability Facility -- established to provide support to the bloc’s struggling economies.

European leaders have called on China, which has the world’s largest foreign exchange reserves at $3.2 trillion, to invest in the fund.

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