Financial risk warning to get rid of the IMF

The International Monetary Fund (IMF) said the economic recovery was not expected to be synchronous and different between developed and emerging market economies, and that measures taken during the epidemic could lead to undesirable consequences such as long-term assessments and increased financial vulnerabilities. .

The IMF has published the April 2021 issue of the Global Financial Stability Report. The report noted that emergency policy measures eased financial conditions and supported the economy by preventing financial stability risks.

Bloomberg HT to your news by; “Measures taken during a pandemic can lead to unintended consequences, such as long-term assessments and growing financial vulnerabilities. Growth is expected to be out of sync, with a contrast between emerging and emerging market economies,” he said. rated.

Monetary policy must be supportive until goals are achieved

Given the large need for external financing, emerging market economies, especially in the United States, will face challenges if the continued rise in interest rates leads to a reassessment of risks and tighter fiscal conditions.

The report noted that concerns about impaired borrowers ‘credit quality and profitability prospects could affect banks’ risk appetite during recovery, and that urgent action was needed to avoid old vulnerabilities.

“Policymakers need to act early and tighten selected macroprudential policy instruments to prevent the spread of fiscal conditions. They must also support the restoration of balance to promote a sustainable and comprehensive recovery.” rated.

The report noted that policy support remains needed until there is a sustained and comprehensive recovery to keep credit flowing into the economy and the epidemic not threatening the global financial system, adding that “monetary policy needs to remain supportive until compulsory policy targets are met.”

On the other hand, Tobias Adrian, director of the IMF’s Money and Capital Markets Department, said in a blog post that global markets are watching the rise in US long-term bond yields, as rapid and steady growth could lead to tighter financial conditions. could potentially disrupt economic growth prospects.

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