IMF warns next crisis could deplete global reserves – Strategy & Business

By: Economista.es

From Washington, the institution led by Christine Lagarde said that financial defenses have not grown enough in the recent years to achieve the increase recorded in foreign debt.

a dangerous situation as a systemic shock could strike down the financial responses to a crisis, ranging from foreign exchange reserves to regional funds such as the Mechanism European Stability.

“the financial cycles have grown in scope and duration, capital flows have become much more volatile and non-financial companies have become much more important, which has altered the nature of systemic risks “, warned from the Fund. “The needs may exceed the collective resources available,” warned the institution referring to the tools available to face a future systemic crisis for the world economy.

In the document, the IMF takes stock of the system global monetary prevailing since 1973, the year that collapsed the Bretton Woods system, agreed after World War II to end the gold standard. At the last meeting of the G-20 Summit in Shanghai, the Ministers of Economy and Finance reported that the Fund will handle this type of analysis to inform the most important economy in the world on developments in the global financial system.

According to the IMF, the current monetary system, which allows countries to manage their strategy in which the change of the currency is concerned, it has proven to be much more flexible in responding to specific crises. However, the IMF warned that since the crisis of 2008, the system has undergone several vulnerabilities and structural changes which have had a significant impact on the international monetary system. Hence the institution prompted several reforms to move towards a “more coherent” network.

On the other hand, Alejandro Werner, director of Western Hemisphere Department of the IMF said that the institution will be a “light review low “of its projected growth of the global economy during the upcoming spring meetings to be held in April.

” Most likely the review will be done in spring register a slight decline, “he said. The downward revision of the estimate will be given “to the extent that the fourth quarter of 2015 the global economy was weaker than anticipated,” said the economist, who said that “some recovery” looks right now, after the significant uncertainty regarding the development of china’s economy recorded earlier this year.