Non-viable banks burdened with bad debt should not be “left living among the dead,” a senior IMF director tells a conference on the economic crisis in Brussels.
Addressing the Brussels Economic Forum 2009 today in Brussels, José Viñals, Financial Counsellor and Director of the Monetary and Capital Markets Department of the International Monetary Fund (IMF), said there is a need for immediate, forceful and effective policy action to restore confidence in the financial and the banking systems of many countries.
We must continue to support bank intermediation through the provision of liquidity and funding guarantees; but in addition, we need to take measures, and this is an important issue for reflection, on how can we restart securitisation markets, he added.
The latest forecast by the IMF in its World Economic Outlook shows the global economy contracting in 2009 by 1.3%. While the rate of contraction should moderate from the second quarter of 2009 onward, output per capita is projected to decline in countries representing three-quarters of the global economy. Growth is projected to re-emerge in 2010, but at 1.9% it would be sluggish relative to past recoveries.
Vinals: “Vital banks must be recapitalised when necessary and restructured if that is needed, while non vital banks should not be left living endless but should be resolved very very promptly.”
