International Monetary Fund (IMF) in its April 2009 time span, “Global Financial Stability Report” in the in all prospect economic tsunami caused by the global economic institutions or supply write-downs will be about four trillion U.S. dollars, and the circumstances is surprisingly severe.
IMF spiky out that the four trillion U.S. dollars in supply write-downs, the bank will assume two-thirds of which is come seal 2.7 trillion U.S. dollars. In supplement, by the drop in supply prices, all kinds of non-bank economic institutions during the calamity is also facing very many pressure. Held by numerous insurance businesses such as stocks and corporate bonds suffered losses, numerous pension funds held by the Government bond end products fell. IMF Special Note that, even so the majority of these institutions may be prudent to manage danger, but numerous endure a greater danger, but not fully aware of the probable in front of the pressure that may arise.
In addition, by the financial turmoil has resulted in capital from foreign markets, the pace too fast, aggravated the crisis in emerging market countries. IMF believes that foreign investors and banks together with the divestment of the collapse of export markets for emerging market economies led to the financing pressure, the need for urgent attention. Emerging markets is a huge demand for refinancing, it is estimated that in 2009 about 1.8 trillion U.S. dollars, most of which demand from companies, including financial institutions. Although it is difficult to predict, the current estimate is that in 2009 net flows to emerging markets private capital will be negative, and the future capital inflows is unlikely to return to pre-crisis levels.
Governments should take measures, IMF also suggested. IMF warned in its report that, in order to avoid deterioration of the situation, governments must take a firm policy action. Although the Government to inject additional funds into the banking system and the actions of some progress, but in dealing with bad debts and the banks can not afford to shut down insolvent financial institutions, it should be more efforts.
IMF said that in alignment to double-check the productive implementation of the restructuring design, the Government will occasionally conquer some or all economic organisations is essential, but the Government should restart when likely of its personal rank, and in the bank at the identical time restructuring the provision of ample liquidity. For those banks have been incapable to endure, they should be very fast in order that they close down.
At the same time, in order to avoid the financial protectionism, led to the crisis on emerging economies have a greater destructive, IMF also recommended that the coordination of policy, to avoid beggar-thy-neighbor approach, which further form a stable global financial system.
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