IMF: Banking turmoil risks global financial stability

Ongoing chaos in the banking sector threatens the global economy, according to the managing director of the International Monetary Fund (IMF).

Commenting after the collapse of Silicon Valley Bank and the brokered takeover of Credit Suisse, IMF chief Kristalina Georgieva argued rising interest rates were putting significant pressure on banks’ balance sheets:

“At a time of higher debt levels, the rapid transition from a prolonged period of low interest rates to much higher rates – necessary to fight inflation – inevitably generates stresses and vulnerabilities, as evidenced by recent developments in the banking sector in some advanced economies.”

The vice-president of the European Central Bank, Luis de Guindos, said this will have an impact on businesses: “Our impression is that they will lead to an additional tightening of credit standards…And perhaps this will feed through to the economy in terms of lower growth and lower inflation.”

Find out more about the recent slew of negative headlines concerning American and European banks: Should We Be Concerned About Europe's Banks? | GC Business Growth Hub

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