Thursday, 22 September 2011

Europe and America, Sources of Financial Risk

The global financial crisis is going through its fifth year, according to the accounts of the International Monetary Fund (IMF). The deterioration of public balance sheets in Europe and the United States has become a major risk factor for global financial stability.

The IMF showed a lack of progress in the consolidation of public accounts and estimated that this market decline have taken a bill of 200.000 million euros to banks only in the region. To this we must add an additional credit risk of 100.000 million euros in the peripheral economies, which makes a total of 300.000 million euros.

Introducing the "Report on the Global Financial Stability", José Viñals, Director of Capital Markets Department at the IMF, said that increased risk premiums are demanding markets for two years "has had a direct impact approximately 200.000 billion in banks in the European Union. "

This estimate does not include the capital needs of regional banks, because "to have an estimate of the requirements should apply a deep stress test."

According to the IMF, the authorities in advanced economies have not achieved the political consensus around the medium-term fiscal adjustment, there is no positive expectations about the upcoming return of stability in the markets and the financial system.


In the report, analysts Fund reported that the sudden interruption of the flow of investment funds and bonds of emerging markets could be a risk factor for banks in Latin America.

"Banks in Latin America are more vulnerable to shocks in terms of trade, while those in Asia are more sensitive to increases in borrowing costs," it reads.

In accordance with Chapter I of the report, banks in emerging economies in the region are in a more stable and healthier than those kept by financial institutions in America and Europe, however, given the link of these institutions with subsidiaries in industrialized countries could be, in an extreme case, a brake on investment flows and holdings of bonds.

After a series of projections to anticipate the impact of economic and financial shocks on banks operating in Latin America and Asia, concluded the relevance of "lay the groundwork for a more robust financial framework" and the further strengthening of balance sheets banks.


"The world economy needs urgent action"

The U.S. president, Barack Obama, said during his presentation to the United Nations that the world must take "urgent and coordinated action" to rescue the economy.

"We are with our European allies as they restructure their institutions and face their own fiscal challenges," Obama said in his speech to the UN General Assembly.

"In other countries, leaders face a different challenge while (...) put their economies and boost domestic demand while moderate inflation," he said.

Later, Obama met with the new prime minister of Japan, Yoshihiko Noda, the end of the meeting, said that his country and Japan need to continue to promote economic growth.

"As the two largest economies in the world, we must promote growth that can help our people to have jobs and improve living standards," he said Obama.

Noda Obama and pledged to work closely to boost the world economy and promote a strong, sustainable and balanced.

No comments:

Post a Comment