Risks to the global financial system have subsided as a result of unprecedented policy actions and, more recently, a nascent global economic recovery, according to the IMF’s latest Global Financial Stability Report (GFSR).But the semiannual report, cautions that the road to financial rehabilitation is unlikely to be straight and that there will be significant policy issues ahead.
"We are on the road to recovery, but this does not mean that risks have disappeared,” José Viňals, Director of the IMF’s Monetary and Capital Markets Department.
The report points to the need to further repair bank balance sheets to enable the institutions to make loans needed to support the economic recovery. Without this step, downside financial and economic risks could reemerge, the report said.
"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. As you know, that is something we simply cannot afford," Viňals told a press briefing in Istanbul, Turkey, where the IMF released the report ahead of its annual meetings.
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