Wednesday, October 6, 2010

I.M.F: Financial System Still At Very High Risk: Euro Banks Most at Risk

The latest Global Financial Stability Report was released yesterday by the IMF. The conclusions are not good. Although it says that stability in the global financial system has gradually improved over the past six months, considerable risks remain.
The issue is that the very high and rising public debt burdens the advanced economies, and there are funding challenges for banks, as well as increased uncertainty about the next phase of the recovery.
Jose Vinals, director of the IMF's monetary and capital markets department: "As a result, financial markets remain sensitive to negative surprises, and can quickly shift back to crisis mode," said
Advanced economies are in danger of numerous downside risks, warning that their high debt levels exposed banks to potential funding shocks. Global banks have made little headway in reducing their reliance on wholesale funding, with eurozone banks most at risk.

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