IMF chief warns of increased risks to financial stability

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IMF chief warns of increased risks to financial stability

The International Monetary Fund warns that the risks to financial stability have increased.

That's the view of IMF chief Kristalina Georgieva in a speech in Beijing on Sunday.

She called for continued vigilance despite the moves of advanced economies to calm market stress.

The IMF managing director reiterated her view that 2023 would be another challenging year, with global growth slowing to below 3% due to scarring from the pandemic, the war in Ukraine and tighter monetary tightening.

The outlook for global growth in 2024 was better, but still not as good as it was in 2024, and the overall outlook was weak.

The IMF is going to release new forecasts next month.

Georgieva said policymakers in advanced economies had responded decisively to financial stability risks in the wake of bank collapses, but continued vigilance was needed.

She said that the IMF is paying close attention to the most vulnerable countries, particularly low-income countries with high levels of debt, because they are watching developments closely and are assessing the potential implications for the global outlook and global financial stability.

These shocks brought back memories of the financial crisis of 2008 -- 2009.

The banking crisis began when the FDIC shut down Silicon Valley Bank, the nation's 17th largest, as regulators moved to protect customers as it faced a crunch after a $2 billion loss.

It was the largest bank failure since the financial crisis.

The Federal Reserve shut down the New York-based Signature Bank in order to protect consumers after the collapse of SVB.

Big U.S. banks voluntarily deposited $30 billion for the First Republic Bank.

In Europe, UBS took over Credit Suisse.

The Fed's restrictive monetary policy has been cited as a factor in the recent bank failures.

The Federal Reserve has a 25 basis point interest rate increase and put to rest speculation about whether the storm brewing in the U.S. could cause the central bank to relax on its monetary policy, according to the latest meeting.

The federal funds rate is expected to increase to a range of 4.75% to 5%, the highest level in 15 years.