IMF: Global financial system weak link in economic recovery

6 October 2010

The International Monetary Fund (IMF) has warned that economic recovery around the world may be held back by weaknesses in the global financial system.

In its latest report, it pointed out that there has been a "setback" in the progress towards worldwide financial stability since April 2010.

"The recent turmoil in sovereign debt markets in Europe highlighted increased vulnerabilities of bank and sovereign balance sheets arising from the crisis," said the IMF.

But it added that governments have dealt well with the situation, helping to stabilize the funding markets.

However, the IMF went to warn that sovereign balance sheets are currently "highly vulnerable" to growth shocks, leading to concerns about the sustainability of debt.

Last month, the IMF praised the British government for their deficit reduction program and described the UK economy as on the mend.

It said the public sector cutbacks planned in the country will help to support a balanced recovery.

By Asim Shah

Become a bobsguide member to access the following

1. Unrestricted access to bobsguide
2. Send a proposal request
3. Insights delivered daily to your inbox
4. Career development