Interest rate hikes – The International Monetary Fund warns of financial sector weakness

According to the International Monetary Fund (IMF), the recent problems faced by banks in the United States and Europe show how vulnerable the financial sector is after years of ultra-low interest rates. “Such risks may increase in the coming months,” said an IMF blog on financial stability published in Washington on Tuesday.

The background to this is the high interest rates by central banks around the world. Neighbors should also be taken care of – pension funds, insurance companies and hedge funds, for example. They have gained importance since the global financial crisis in 2008. They account for nearly half of the financial investments in the world. Here, too, there appears to be an increasing vulnerability.

Central banks are fighting inflation

Central banks are currently trying to control high inflation again by raising interest rates extraordinarily. This has a noticeable effect on many financial players. Many regional banks in the US have been under pressure lately, as customers fear for their deposits. In Europe, Credit Suisse was transferred to its Swiss competitor UBS to stop the loss of confidence in the financial markets.

IMF experts stressed that central banks will have to make tough decisions again and again, balancing prices and financial stability. Politicians need appropriate means for financial intermediaries outside the traditional banking sector to address weaknesses. (Reuters)

More on wienerzeitung.at comments on this article