International Monetary Fund said that there is no end in sight to the credit crisis gripping world financial markets, predicting that banks are in for more pain as mortgage defaults soar and economies slow. With revelations still fresh about the extent of exposure for Australian banks NAB and ANZ, the IMF has issued a particularly gloomy assessment of the US economy in its latest global financial stability report.

Mr Jaime Caruana head of the IMF's capital markets division said that global markets are not stable. He added that "Global financial stability remains fragile and systemic risks seem to be returning and that's despite this the important policy measures taken by authorities and also despite the significant adjustment that financial markets have been doing over the past few months."

Nearly a year after the global credit crisis emerged, the IMF says bank write downs associated with the credit crunch now exceed USD 400 billion. It believes this figure could rise to USD 1 trillion and it’s not just the banks the IMF is worried about.

Mr Caruana said that America's housing market is still in free fall. He added that "At the centre of this is the housing market in the United States, very important to stabilize and it is difficult to see at this very moment the bottom of it although there are some signs and some indicators."