The International Monetary Fund was seeking to defuse growing tensions over global currencies yesterday amid fears that the US will respond to its stubbornly high unemployment figures by slapping tariffs on Chinese goods.

With China refusing to bow to pressure from the US and Europe to revalue its currency, the annual meeting of the IMF was dominated by concerns that Washington is on the point of losing patience with Beijing. Finance ministers and central bank governors gathered in a gloomy mood, expecting no quick fix to the problem – despite a warning from the IMF that failure to tackle the global jobs crisis could threaten democracy.

Latest figures for the American labour market, released on Friday, showed 95,000 jobs were shed in September, adding to the problems of the Obama administration ahead of next month's mid-term elections.

The poor outlook for jobs in the US has alarmed the Federal Reserve, which is expected to announce a fresh wave of quantitative easing next month, and added extra spice to the row between Washington and Beijing.

Dominique Strauss-Kahn, the IMF's managing director, warned that "we face the risk of a lost generation", adding: "When you lose your job, your health is likely to be worse. When you lose your job, the education of your children is likely to be worse. When you lose your job, social stability is likely to be worse – which threatens democracy and even peace. So we shouldn't fool ourselves. We are not out of the woods yet. And for the man in the street, a recovery without jobs doesn't mean much."

Tim Geithner, Obama's treasury secretary, said: "The United States believes that global rebalancing is not progressing as well as needed to avoid threats to the global economic recovery.

"Our initial achievements are at risk of being undermined by the limited extent of progress toward more domestic demand-led growth in countries running external surpluses and by the extent of foreign exchange intervention as countries with undervalued currencies lean against appreciation."

Zhou Xiaochuan, China's central bank governor, did little to satisfy Washington's demand for quick action on the yuan, when he said Beijing was committed to gradualism rather than "shock therapy" when it came to the revaluation of its currency.

European policymakers also expressed deep concern about the impasse after the euro hit $1.40.

The chairman of the group of eurozone finance ministers, Jean-Claude Juncker, said part of the problem was a lack of a suitable forum for bringing currency negotiations to a point.

Two years ago, the G20 group of developed and leading developing nations was formed in an attempt to find a collective solution to the world's economic problems. But policymakers have become increasingly frustrated by the unwieldy nature of the G20.

"In the G20 framework there are too many people and too many interests to be able to find a currency arrangement," Juncker said. "The ideal forum would be G7 plus China."

Jean-Claude Trichet, the president of the European Bank, said: "We must keep the spirit of co-operation that we had during the crisis … we must avoid the beggar-thy-neighbour policies that I see looming."