Institute of International Finance Chairman Josef Ackermann, who chairs the management board at Deutsche Bank, also saw signs credit strains were easing but warned the economic system might soon face fresh danger from a surge in inflation.

'If you go back over the last two years, there were a lot of signals that indicated we are going just a little bit too far,' Mr Ackermann said of banks' excessive appetite for risk before the bursting of the United States housing bubble last year.

He said banks are back to a 'much more normalised situation' after being forced to take billions of dollars in writedowns and seek capital infusions in recent months.

'My strong conviction is that we are seeing the beginning of the end of the financial crisis,' Mr Ackermann said on Thursday.

'Unfortunately on top of that we have some new challenges... from inflationary pressures, the weakening of the dollar.'

The IIF report said central bank efforts to provide liquidity had been impressive but called on the financial industry to do more to restore confidence and credibility.

Firms should have a company-wide focus on risk and name a chief risk officer the report said. They should also have robust methods in place to monitor liquidity.

'We are accountable for a large part of the problems,' said Bank of Nova Scotia Chief Executive Rick Waugh, an IIF board member.

Restoring the financial industry's credibility will not be easy, said the report, 'especially as the global economy has entered a downturn, weighed down by surging commodity prices and rising inflationary pressures, as well as continuing market strains'.

But IIF leaders expressed cautious optimism, especially regarding banks' liquidity positions.

'We're not back to normal, but we're in much better shape than the last half of '07,' Mr Waugh told a news conference.''It gives me some degree of encouragement.'

The IIF's board also includes representatives from Deutsche Bank, Citigroup, Barclays, Bank of America, and Credit Suisse, among others. -- REUTERS