director of the International Monetary Fund, Kristalina GeorgievaToday, he asked to “remain vigilant” in the face of “uncertainty” and risks in the financial sector, which remain “exceptionally high”.
“It is clear that the risks to financial stability have increased,” Georgieva said at the China Development Forum organized by the Chinese government in Beijing.
“Political leaders have taken decisive action to respond to risks to financial stability,” the international official said. “These measures have somewhat eased tensions in the markets, but uncertainty remains high, underscoring the need to remain vigilant,” he said.
Georgieva explained that risks to financial stability have increased precisely at a time of rising global indebtedness. He attributed the current situation to the rate policy pursued by central banks in recent years. “A rapid transition from a prolonged period of low interest rates to much higher anti-inflationary rates inevitably creates pressures and vulnerabilities, as we have seen in recent developments in the banking sector,” he said.
German Chancellor Olaf Scholz said about the situation in Deutsche Bank, “There are no reasons to worry,” after the sharp decline in the shares of the bank, the largest in Europe.
The bankruptcy of California’s California Valley Bank (SVB) on March 10 sent a wave of tension in the banking sector in the United States and Europe, which led to the hasty sale of Credit Suisse, one of the most traditional banking houses in Switzerland, also the Swiss bank UBS, and a joint action of By the central banks of the United States, Europe and Japan to provide liquidity lines for financial systems and prevent the spread of panic situations.
A new blow was dealt on Friday, with a general decline in the stocks of major banks led by the German bank Deutsche Bank, which led to the German Chancellor (head of government) Olaf Schulz To make public statements on the matter and to stress that there are “no reasons for concern” about Deutsche Bank, the largest in Europe.
With such recent events in mind, Georgieva said in Beijing: “We’ve seen policymakers act decisively in response to the risks of financial instability and we’ve seen central banks in advanced economies improve conditions to provide dollar liquidity. These actions have eased tensions somewhat, but Uncertainty is high and underscores the need to remain vigilant.”
According to the fund manager, One of the most positive news for the global economy is the recovery of the Chinese economy, which after growing by only 3% in 2022, will rebound by an average of 5.2% this year.This is largely due to the lifting of severe restrictions on movement that were arranged last year to contain the Covid-19 pandemic. However, in January, the International Monetary Fund lowered its forecast for the global economy in 2023 from 3.4 to 2.9%, which in turn depends largely on the development of the international geopolitical situation, in particular the tensions between the United States and China.
Regarding the financial situation, last Thursday the fund published a report warning of the need to preserve the independence of central banks and that they communicate their monetary policy and information about reserves as well as about the relationship and dialogue they maintain with legislators, investors and the general public. general.
To date, the fund has reviewed the quality and transparency of central banks in Canada, Chile, Morocco, North Macedonia, Seychelles, Uganda and Uruguay.
The Agency has compiled this request for clarity and transparency regarding: 1) monetary policy. 2) comply with the requirements of the information provided; 3) Accountability of the members of the Board of Directors of the Central Bank. 4) supervision of entities; 5) Central Bank General Assembly. 6) Information on international reserves. 7) Exchange rate policy. 8) macroprudential policies (liquidity requirements, technical regulations, etc.); 9) Exchange operations. 10) Financial integrity.
In this regard, the fund has so far reviewed the transparency and clarity of the central banks of Canada, Chile, Morocco, North Macedonia, Seychelles, Uganda and Uruguay.
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