The head of International Monetary Fund (IMF), Kristalina Georgieva, called on Sunday to “remain vigilant” in the face of “uncertainty” still “high” in the financial sector, comments which come following the recent setbacks of Western banks. California bank failure Silicon Valley Bank (SVB) on March 10 raised concerns regarding the soundness of the banking sector in the United States and Europe.
First European victim, Credit Suisse was taken over in disaster by its compatriot UBS last Sunday for a fraction of its market value. “It is clear that the risks to financial stability have increased,” Kristalina Georgieva said on Sunday at the China Development Forum, an event hosted by the Chinese government in Beijing. The takeover of Credit Suisse by UBS, piloted by the Swiss authorities, as well as recent measures by central banks to improve access to liquidity, have helped to avoid panic but have failed to restore stability to the markets.
“Need to remain vigilant”
“Policymakers have taken decisive action in response to risks to financial stability,” Kristalina Georgieva stressed in her speech. “These measures have to some extent eased tensions in the markets, but uncertainty is high, underscoring the need to remain vigilant. Banking stocks on European stock markets fell once more on Friday.
Recent statements by Christine Lagarde, President of the European Central Bank (ECB), reaffirming the resilience of the banking system, and those of the French President Emmanuel Macron or German Chancellor Olaf Scholz, who wanted to be reassuring, failed to calm people down. US President Joe Biden told him on Friday in Ottawa (Canada) that the “banks were doing pretty well” and that he saw nothing “regarding to explode”. However, he acknowledged that it would take “a little time for things to calm down”.
