IMF: World is still dangerously close to the abyss

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IMF: World is still dangerously close to the abyss
There is only a small shock to the global economy to derail again. While progress has been made in policy makers in recent years done a lot to the world from a depression, but the buffers are not nearly large enough to the future with confidence.

Chief Economist Olivier Blanchard with that warning comes from the International Monetary Fund (IMF) in a note, which was published on the eve of the annual meeting of IMF and world bank in Washington. Central bankers, ministers and leading economists from Tuesday in the u.s. capital gathered to discuss the latest financial and economic developments.

‘ We will continue our commitment to the economy to keep away from the “dark corners”, from situations where they experience serious disruptions that can lead to a deep and prolonged malaise ‘, says Blanchard.

Buy time

The central question In Washington state why global growth is disappointing and what specifically needs to be done to boost the ailing economies. For example, Europe must reform and cut down the shift to a focus on stimulating demand and what should be the role of the European Central Bank (ECB)?

In an interview with Het Financieele Dagblad stresses Luc Coene, Governor of the Belgian National Bank and also a member of the Governing Council of the ECB, that ‘ too much is expected from central bankers. We can only buy time with our measures. ‘

The bank is facing a dilemma. “If we do nothing, we run the risk in a deflationary spiral, and descends the economy beyond. ‘

Reforms Campbell emphasises the need for structural reforms. But more and more economists are calling for higher public spending. IMF’er Blanchard recalls that the European crisis especially was due to the ‘ vicious circle ‘ between private and public debt. Weak countries made weak banks, which in turn weakened the banks again.

The ECB broke through that vicious cycle, by being on set as ‘ lender of last resort ‘. But the debts are far from being eliminated. ‘ There’s not much to start the spiral again, “says Blanchard.

For the Frenchman, it is crucial that policymakers ‘ debt slowly but steadily to push ‘ less dangerous levels. The IMF Chief Economist sees in the financial sector is still a threat to the recovery of the global economy. Banks are more transparent and have in recent years increased their capital buffers under pressure from regulators, but according to him they always find holes in the regulation.

Also the influence of other market participants b Blanchard worries. The broad money policy of the central banks has ensured that many investors excessive risk taking.

Marcel de Boer

Sunday 5 october 2014, 21:00

Olivier Blanchard Reuters

 

2 REACTIES

Grootste gevaar zit in het toenemende schuldenniveau van landen. Met name VS met hun dollar is een immens gevaar voor de financiële stabiliteit.

08:35 Dhr. Beurskens

Mondiaal gezien zijn de financiële buffers groot genoeg maar bevinden zich in verkeerde en vooral te weinig handen.Het is vooral de ongelijkheid welke op termijn voor grote sociale en geo-politieke problemen gaat zorgen en het blijft verbazen dat dit onderwerp steeds maar weer naar de achtergrond geschoven wordt. Uiteindelijk gaat de wal het schip toch keren en valt een mondiale ontwrichting nauwelijks meer te vermijden.

09:10 Dhr. Koornneef

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