Next few hours crucial for stabilizing markets: IIF

WASHINGTON (Reuters) - Failure by world leaders to swiftly announce "bold measures" to restore confidence among investors would result in "further deterioration" in financial markets, the world's leading bank lobby warned on Sunday.

Josef Ackermann, chairman of the Institute of International Finance, expressed confidence that European leaders would come up with a plan to help banks roiled by the financial crisis, and stressed that policy-makers can not afford to miss this opportunity.

"Tonight, tomorrow morning are very critical moments," Ackermann, who is also CEO of Deutsche Bank, told reporters in Washington. "I think we have to do whatever is needed to bring confidence back, even if it is a little artificial, with some state help and guarantees."

Prime ministers and presidents from the 15 countries sharing the euro currency plus Britain met in Paris on Sunday to find a response to the chaos that has frozen credit markets, the lifeblood of the financial system.

Citibank CEO and IIF First Vice-Chairman William Rhodes called on policy-makers to "overshoot" on their response to the crisis, because that would be better than underplaying it.

"For me, personally, this is the most serious crisis that I have witnessed in my 50 years in the banking sector," Rhodes told the same news conference.

Even if world leaders act as needed, market confidence will not be restored "overnight," Ackermann said, And when financial markets eventually stabilize, the world will be left with serious problems in the real economy, he added.

(Additional reporting by Philipp Halstrick)