The global financial safety net has become increasinglyfragmented, making it harder to respond to crises in a world roiledby volatile capital flows, International Monetary Fund (IMF)staffers warned.

Defenses haven't kept up with the growth of external debt inrecent years, the Washington-based fund said in a report releasedThursday. As a result, a system-wide shock could overwhelm theworld's crisis resources, which include nations' foreign-exchangereserves, central-bank swap lines, regional funds such as the euroarea's European Stability Mechanism, and the IMF itself, the lendersaid.

Financial cycles have been “growing in amplitude and duration,capital flows have become more volatile, and non-banks have gainedimportance, altering the nature of systemic risk,” IMF staff saidin the report, which was presented to the fund's executive board onMarch 7. In a major event, “the needs could exceed the collectiveresources available,” the fund said.

Complete your profile to continue reading and get FREE access to Treasury & Risk, part of your ALM digital membership.

  • Critical Treasury & Risk information including in-depth analysis of treasury and finance best practices, case studies with corporate innovators, informative newsletters, educational webcasts and videos, and resources from industry leaders.
  • Exclusive discounts on ALM and Treasury & Risk events.
  • Access to other award-winning ALM websites including PropertyCasualty360.com and Law.com.
NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.