International Organization
Global financial system continues to strengthen: IMF
- IMF advises policy makers to contain financial vulnerabilities, but support "smooth" monetary policy normalization

The global financial system continues to strengthen in response to policy support, regulatory improvements, and an upturn in economic growth, the International Monetary Fund (IMF) said Wednesday in its Global Financial Stability Report.

Central banks around the world are continuining to support accommodative monetary policies for the global economy, the report said.

The IMF, however, warned that if banks raise their interest rates too rapidly, increased inflation in major economies would follow and hurt economic recovery in general.

Such a policy path could also "... cause unwanted turbulence in financial markets and reverberate across borders and markets," according to the report.

The Fund advised policy makers to prevent such negative developments and said financial vulnerabilities should be contained, but with balance to "a smooth normalization of monetary policy", which should continue to support global economic recovery.

"Policymakers and regulators should fully address crisis legacy problems and require banks and insurance companies to strengthen their balance sheets in advanced economies," the report added.

The IMF said it expects that emerging market economies will continue to benefit from external conditions, such as growth recovery and more accomodative policies in advanced economies, to increase their own resilience.

However, it listed Turkey among the countries that are projected to have sizable external financing needs through 2020.

"The buildup in external financing pressures could be particularly challenging for countries with large and rising projected current account deficits," the report said.

"Colombia, South Africa, and Turkey have projected current account deficits in the range of 3 to 4.5 percent of GDP in 2019," it added.


By Ovunc Kutlu in New York

Anadolu Agency


11 Oct,2017