International Monetary Fund: Financial risks need to be balanced out

October 12, 2021

The International Monetary Fund confirmed that economic optimism has diminished and financial fragility has increased.

It stressed that policymakers around the world should pay attention to providing economic support without increasing instability in financial markets.

The International Monetary Fund (IMF) released the October 2021 Global Financial Stability Report.

The report stated that risks to financial stability have been brought under control while the global pandemic continues.

In the report, which indicated that the uncertainty was severe, it was noted that society is facing the challenges of the Coronavirus, the cryptocurrency market, and climate change.

“With improving financial conditions in advanced economies, the optimism that drove markets in the first half of the year waned a bit over the summer,” the report said.

Confirming that investors are increasingly concerned about the economic outlook, the report said: “Fears are that inflationary pressures may be more persistent in late September than initially anticipated.

And it completely reversed previous moves in some countries, which led to higher nominal yields

The report said that despite some developments since the Global Financial Stability Report was released in April.

However, financial vulnerabilities continue to rise in some sectors and are partly masked by significant policy incentives.

The report noted that policymakers face a difficult trade-off and stated that policymakers around the world should pay attention to providing economic support without increasing instability in financial markets.

It was mentioned in the report that the prolonged period of very comfortable financial conditions, although necessary for the continuation of the economic recovery.

However, it can cause assets to be overvalued and fuel financial vulnerabilities.

“If left unchecked, these loopholes could turn into structural problems, jeopardizing medium-term growth and testing the resilience of the global financial system,” the report said.