26 Sep 2011

Banking system contaminated - bond trader

12:41 pm on 26 September 2011

Pimco, the world's biggest bond trader, says the banking system is contaminated and officials need to act quickly to fix it.

Europe's debt problems are dominating the semi-annual meetings of the world's finance ministers and central bankers in Washington, but investors are increasingly sceptical the crisis can be contained.

Chief executive Mohamed El-Erian says capital needs to be injected quickly into banks. The alternative is a banking crisis.

European officials have used stress tests of bank's balance sheets to determine how financially sound they are.