Shares dived elsewhere in Asia. India's main stock index fell more than nine per cent on opening and Hong Kong's Hang Seng fell by more than eight per cent.

Australia's benchmark S&P/ASX200, South Korea's Kospi and Singapore's Straits Times index also dived steeply, all losing around seven per cent following Wall Street's nearly 700-point drop on Thursday, before they reversed some losses.

Singapore in recession

Singapore's government announced on Friday that its economy was in recession, after releasing figures showing real Gross Domestic Product was down for a second quarter.

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The city-state heavily dependent on trade, making it very sensitive to hiccups in developed economies.

Elsewhere in Asia, Indonesia's share market remained suspended on Friday after it plunged more than 20 per cent during the week.

There are fears that the country could slide into bankruptcy despite assurances by Susilo Bambang Yudhoyono, the president, that the situation is "fully under control".

Chris Holm, a consultant for Van Zorge Heffernan, a risk and consultancy firm, in Jakarta, told Al Jazeera that the Indonesian government had been discouraged by its Asian neighbours.

"The market fell sharply - 10 per cent - when it opened on Wednesday in Indonesia. Trading has been shut down for the last two to three days, but last night they talked about re-opening the exchange," he said.

"But when stock market regulators realised this morning that the rest of Asia was dong so badly, they decided to suspend trading further."

The IMF and the World Bank are due to hold their annual meetings on Friday and over the weekend, while finance ministers from the G7 group of wealthy nations will converge on the meetings' sidelines in Washington DC this weekend for talks on the crisis.

Currency reserves loan

A Japanese newspaper said Japan was to propose an IMF loan scheme at the meeting to give countries facing financial crisis access to the trillions of dollars in currency reserves held by Asian and Middle Eastern governments.

Experts are calling for a concerted global effort to restore confidence [GALLO/GETTY]
The IMF-led scheme would be available to smaller emerging countries, not G7 members or other large nations, according to the Nikkei newspaper.

Under the Japanese plan, the IMF would ask the country that is to receive the funds to draw up a plan for revitalising its financial sector including writing off its bad assets.

The new emergency loans would be funded by the approximately 200 billion yen ($2bn) contributed by IMF member countries plus loans from the foreign currency reserves of countries such as Japan, China and Middle Eastern oil exporters.

The massive declines in Asia and on Wall Street comes despite the IMF reactivating an emergency aid process for countries seeking help in the global financial crisis, Dominique Strauss-Kahn, the institution's president, said on Thursday.

He warned that the global economy was "on the cusps" of a recession and added that the IMF was "ready to answer any demand by countries facing problems".

The declines also come after the US Federal Reserve and central banks across the world from Europe to Asia cut interest rates to contain the market meltdown.

Co-ordinated action urged

James Henry an economist and investigative journalist, told Al Jazeera that the crisis "is not contained, it's spreading to a global level".

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"This is something that policy-makers have to get under control in the next week or so, otherwise we're in for a very deep depression," he warned.

Henry said central bank rate cuts and the plan to buy bank's bad assets have not worked.

What is needed is a "global stabilisation fund" to recapitalise banks with equity – as opposed to just buying their bad debt - and a stimulus package with some debt relief for borrowers, he said.

"But it requires much more co-ordination across boundaries than we've had before," he added.

Robert Zoellick, the president of the World Bank, also called for a concerted effort by the world's wealthiest nations to work together on the crisis, telling Al Jazeera on Thursday that "the scope of this problem is much larger than what we can deal with".

"In the short term what the G7 needs to do is to try to take the actions it's starting to take - co-ordinated central bank actions ... to try to clean up the assets, to try to make sure there is liquidity in terms of banks being willing to provide funds to corporations and others [and] recapitalise the institutions," he said.