IMF Says Global Financial Stability Has Continued to Improve

Global financial stability has continued to improve, according to a new report from the International Monetary Fund.
But the IMF warns there are risks ahead nonetheless.

There is political and policy uncertainty around the globe, particularly in the United States and Europe.
There is also a warning from the IMF about rising debt levels in China.

One of the key elements underpinning this judgement that financial stability has improved is the stronger overall economic outlook that the IMF described 24 hours earlier.

Stronger economic growth means that households, businesses and governments have more income to maintain the payments on their debts. It tends to reduce the danger of debt defaults which can do widespread damage to banks.

Long term interest rates have risen in many countries, boosting the earnings of banks and insurance companies.

Some risks in emerging markets have fallen as the prices of the commodities some of them produce, such as oil, have partly recovered from recent lows. Many banks in these countries have strengthened their financial foundations.

So, sighs of relief all round? Can we finally relax? Have the dark clouds of the crisis of 2008 finally gone?

Only up to a point. The report does identify some risks to financial stability.

via BBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza