IMF top woman: ‘Greater risks to financial stability’

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IMF top woman: ‘Greater risks to financial stability’

The sharp rise in interest rates has clearly increased the risks to financial stability, said International Monetary Fund (IMF) top woman Kristalina Georgieva. Authorities in Switzerland and the United States, among others, have intervened after the collapse of banks to prevent too much chaos, but the events of recent weeks ‘underline the importance of vigilance’.

The sharp rise in interest rates has clearly increased the risks to financial stability, said International Monetary Fund (IMF) top woman Kristalina Georgieva. (ANP / AFP)

“We continue to monitor developments closely and are exploring the potential implications for the global economy and financial stability,” Georgieva said in a speech at the China Development Forum in Beijing.

In the speech, she also reiterated her warning that the fragmentation of the world into different political and economic blocs will curb global growth. At the moment, for example, there is a trade conflict between the United States and China, especially in the field of high technology, and the war in Ukraine. These can thwart international cooperation for development aid or the fight against climate change.

Economic growth

Georgieva, on the other hand, was optimistic about the expected economic growth of China, which is likely to recover further this year from the severe corona lockdowns that major cities faced last year. But she also called on the Chinese government to reform the domestic economy.

She believes that less emphasis should be placed on investments in heavy industry, which largely consists of state-owned companies. Instead, consumer spending should become an important pillar of economic growth. A better social safety net in the event of unemployment and illness would help.

At the same time, she called on the Asian superpower to cooperate more closely with the international community in helping poor countries suffering from a high debt burden. Of all countries, China is the world’s largest lender to other countries, increasingly acting as a provider of emergency credit to developing countries. But if those countries get into trouble, according to critics from the US, among others, China often delays a solution in which debts are canceled out.

“In the coming months and years, it will be vital to continue helping the world’s most vulnerable countries. Only through cooperation can we meet the world’s greatest challenge, avoiding the trap of fragmentation,” said Georgieva.


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