IMF Report Warns of Medium-term Challenges for Global Economy

The International Monetary Fund (IMF) warned of increasing medium-term challenges for the global economy as it released its latest global financial stability report on Wednesday. The biannual report said the short-term challenges facing global finance have abated since April, but the continued slow economic growth worldwide could subject the financial market to an extended period of low inflation and low interest. "Failure to adapt to this new era could undermine the health of financial institutions and add to the pressures of financial and economic stagnation," said Peter Dattels, deputy director of the IMF's monetary and capital markets, at a press conference held in Washington D.C. just two days before the start of the IMF and World Bank annual meetings. The report pointed out that cyclical recoveries will not solve the low-profit issue. It said over 25 percent of banks in advanced economies continue to have weak performances and face structural challenges, stressing that these challenges affect most financial systems on some level. "The weak outlook has pushed hopes for normalizing monetary policies well into the future. As a result, almost 40 percent of advanced economy government bonds are carrying negative yields. This is unprecedented," said Dattels. The report also encouraged emerging market economies to take advantage of supportive external conditions to proactively monitor and address corporate vulnerabilities, especially on excess leverage and foreign exchange exposures. "Most emerging markets appear to have sufficient buffers to cushion their current holdings of non-performing loans. The bad news is that while leverage has peaked, default risk is likely to rise further. We find that larger bank buffers are needed in several emerging markets, and supervisors should focus on this potential in the period ahead," said Dattels. More on: http://www.cctvplus.com/news/20161006/8033703.shtml#!language=1 Subscribe us on Youtube: https://www.youtube.com/c/CCTVPlus CCTV+ official website: http://www.cctvplus.com/ LinkedIn: https://www.linkedin.com/company/cctv-news-content Facebook: https://www.facebook.com/NewsContent.CCTVPLUS Twitter: https://twitter.com/CCTV_Plus