IMF: “Chance of a new financial crisis grows’ – The Standard

IMF: "Chance of a new financial crisis grows' – The Standard

             European banks have improved in recent years, but largely lack the strength to support the recovery. Economy That allows the International Monetary Fund (IMF) in a report on Wednesday presented the international financial sector.
         

According to the IMF, 70 percent of the banking sector in the euro area is currently unable to support by giving businesses more. Credit the economy They have indeed strengthened their buffers, but their profitability while seeing plummet. In order to provide more credit profit is up, but it is for many institutions the extent possible.

Banks which are now declared healthy thanks to larger capital reserves are safe enough for a “normal life” , outlined IMF director José Viñals the situation. “But in many countries, banks ‘athletes’ have to be that recovery can strongly support.”

Because banks are still struggling with the new reality after the financial crisis, the role of other parties in the growing financial markets. This can be problematic because they can meet then they promise now. According to the IMF in crisis worse with their obligations

“Cheap money creates more bubbles

Meanwhile, the probability of a new financial crisis, grown according to the fund. In addition, the IMF notes the very low interest rates and other measures of central banks. Which are necessary to support the economy, but currently mainly lead to the “wrong risks. Instead of investing to hunt in production is a particular risk to ensure bubbles in financial markets, where the hazards are underestimated.

cheap money

For a better balance to the channels for lending are “unclogged” said Viñals. Supervisors must thereby creating room for banks to not only their buffers, but also to strengthen their profitability.

He sees an important role for the Bank ECB research and subsequent supervision by the central bank. In addition, weak banks may be forced to withdraw from certain markets or cease their activities. Completely In this way, can arise for stronger institutions that remain.

a healthier market