IMF Warns of Risks to Eurozone BanksOctober 10, 2012 @ 7:53 AM EST
IMF Warns Of Risks to Eurozone Banks
According to the FT, the IMF has warned that unless the Eurozone resolves the debt crisis, the region's banks may need to review their capital structures.
In its semi-annual check on the world's financial health, the Fund said the euro area's debt crisis was a key threat and the risks to global financial stability had risen in the last six months leaving confidence "very fragile."
The IMF says that unless the crisis is resolved, banks may need to sell as much as $4.5T of assets, or more than 7% of their balance sheets, through 2013. This figure represented an 18% increase from the fund's previous estimate in April.
"Despite many important steps already taken by policymakers, this agenda remains critically incomplete, exposing the euro area to a downward spiral of capital flight, breakup fears and economic decline," the IMF said in its report on Wednesday.
The IMF also said that such deleveraging would weigh on growth and add to increasingly high unemployment in the region.
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