IMF points to challenges ahead
An International Monetary Fund director in Istanbul, Turkey, said challenges remain on the road to a global economic recovery.
The semiannual Global Financial Stability Report released Wednesday indicated a recovery was underway. But,
this does not mean that risks have disappeared, said Jose Vinals, director of the IMF’s Monetary and Capital Markets Department.
If we fail to meet the challenges still being faced by the financial system in the present crisis, we risk reigniting systemic risks and even derailing the economic recovery now in train, he said.
The GFSR report estimates the total write downs from toxic assets has dropped by $600 billion in the past six months and now total $3.4 trillion. While an improvement, there remains another $1.5 trillion in potential write downs U.S. and European banks will need to confront by 2012, the report said.
The IMFrecommends banks increase capital and governments
widen the perimeter of regulation to include systemically important institutions. In addition, the IMF called for improved
international collaboration and coordination to cope with the challenges posed by cross-border institutions that function globally.