The level of uncertainty in the world economy is “exceptionally high”, says Kristalina Georgieva, head of the IMF, who highlights the “scars” that the Covid-19 pandemic has left on economies. Kristalina Georgieva is most concerned about the financial sector, which has faced serious turmoil on both sides of the Atlantic in recent weeks.
In a speech at a conference in Beijing, China, the managing director of the International Monetary Fund (IMF) said that “risks to financial stability have increased in a context of higher debt levels.” The official alluded to the fact that “the sudden transition from a prolonged period of low interest rates to higher rates – necessary to fight inflation – inevitably generates turbulence and vulnerabilities, as we have recently seen in the banking sector.”
Therefore, the authorities must “remain vigilant” in relation to these risks.
The acquisition of Credit Suisse by UBS, coordinated by the Swiss authorities, as well as the central bank’s recent measures to improve access to liquidity, prevented panic but failed to bring stability to the markets.
Policy makers have taken decisive action in response to risks to financial stability,” Georgieva said in her speech.
“These measures have eased market tensions to some degree, but uncertainty is high, underscoring the need for continued vigilance.” Bank shares on European stock exchanges fell further on Friday.
The recent statements by Christine Lagarde, President of the European Central Bank (ECB), reaffirming the resilience of the banking system, and those by French President Emmanuel Macron and German Chancellor Olaf Scholz, who were intended to be reassuring, failed to calm things down. .
The president of the United States, Joe Biden, said on Friday in Ottawa (Canada) that the “banks were doing quite well” and that he did not see anything “about to explode.” He acknowledged, however, that it will take “a bit of time for things to calm down.”
Source: Observadora
