The IMF called the collapse of US banks a prelude to serious problems

Photo: © RIA Novosti/Maxim Blinov

Photo: © RIA Novosti/Maxim Blinov

The recent bankruptcies of major US banks could be the beginning of more serious financial stability problems. About it declared in the International Monetary Fund (IMF).

They noted that the collapses of large internationally inactive banks have so far had “only a moderate effect on credit conditions.” At the same time, what happened, as the IMF warned, “could potentially be a prelude to more serious and rooted systemic problems of financial stability.”

Maintaining high interest rates by the US Federal Reserve threatens to turn into big complications in the US banking system and non-banking organizations. Thus, unrealized losses from investments in long-term securities will lead to the fact that for banks “the cost of new financing for households and corporations will become unmanageable.”

The IMF stressed that the tightening of financial conditions will affect the number of bankruptcies and the quality of loan portfolios, which will inevitably worsen. It will also cause increased stress situations for organizations with a high level of debt burden.

“The longer interest rates remain high, the greater the likelihood of crises”– added to the IMF.

Earlier, the IMF called a possible downturn in business activity in the United States, which risks turning into a recession, the strengthening of the dollar and high interest rates of the Federal Reserve System as serious threats to the economy.

Source: Ren


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