The International Monetary Fund said in a report published on October 5 that a significant number of major banks in wealthiest countries of the world are so weak that neither the growth of world economy nor the increase in interest rates will help them solve their problems.
The list of problematic credit organizations includes one-third of European banks with assets totaling $ 8.5 trillion and a quarter of US banks with assets worth $ 3.2 trillion.
According to the IMF, the financial stability now depends on how well financial institutions can adapt themselves to the new era with tougher regulation and supervision, restrained growth and low interest rates.
Experts note that despite the improvement in the structure of bank assets and equity indices, low profitability remains a significant problem that can not be solved through cycles of economic recovery. The report, in particular, draws attention to euro-zone banks, the profits of which have halved since average levels of 2003-2006.
“Financial stability now depends on how well financial institutions are adapting to this new era” with tougher regulation and supervision, restrained growth and low interest rates. We need a fundamental change in the business model of banks, and in the structure of the system to ensure a viable and healthy banking system, “– experts say the IMF report.
Experts believe that Europe lags behind the US in terms of the disposal of bad loans. Both the IMF and the European Central Bank see the extremely loose monetary policy as the main cause of banking problems.
It is also significant concerns of IMF experts in the medium term is the financial stability of Japan and China. Meanwhile, experts said the pressure drop in the emerging markets in terms of higher prices for raw materials and some stabilization of the Chinese economy.
The International Monetary Fund (IMF) has revised its forecasts on the dynamics of Russia’s GDP in 2016. This figure was increased by 0.4 percentage points – to decline by 0.8%. It is stated in the updated forecast of the world economy World Economic Outlook (WEO).