REPUBLIKA.CO.ID, WASHINGTON - Despite of some substantial improvements in the market, International Monetary Fund (IMF) warned policymakers that they were facing two risks. They are old risks from the legacy of crisis and new risks coming from easy monetary policies.
''It concludes that improved financial markets and gains in financial stability will not be sustained unless policymakers can address the key underlying vulnerabilities,'' said Jose Vinals, the Director of the IMF, at a press conference in the IMF Headquarter in Washington on Wednesday, as reported by Elba Damhuri from Republika.
The old risks are related to the eurozone that still needs to be fixed, and healthy banks to support economic recovery. Vinals said that credit was not adequately flowing in the eurozone periphery countries while corporate sector was also facing a sizeable debt overhang, which was built up before the crisis.
''The IMF identifies a weak tail of companies that needs to reduce their debt over time,'' he said.
On banking sector, the Fund considers that five years after the crisis, banking systems around the world are still in different stage of repairment. The IMF finds many banks in the eurozone periphery countries still need to boost their progress in strengthening their balance sheets.
In the new risks, Vinals sees evidences are growing. In the US, corporate debt underwriting standards are weakening rapidly despite the strong corporate fundamentals. ''We also face serious problem on flowing out money from the advanced countries to emerging markets,'' said Vinals.
The IMF emphasized it was essential to depart from the old crisis risks. Policymakers are adviced to increase the needs for continued accomodative monetary policies. ''This will avoid the new risks from growing and from becoming systemic,'' Vinals said.
Global finance and market conditions have improved appreciably in the last six months, providing additional support to the economy and prompting a sharp rally in key assets. Policymakers averted financial cliff in eurozone. In the US the worst fears of the fiscal cliff has been prevented while Japan may finally leave its deflation valley.
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