IMF Director Offers Roadmap to Secure Financial Stability
By José Viñals, Financial Counselor and Director of the IMF’s Monetary and Capital Markets Department
In various guises, the "Year of Living Dangerously" has been used to describe the global financial crisis, the policy response to the crisis, and its aftermath. But, we’ve slipped well beyond a year and the financial system is still flirting with danger. Durable financial stability has, so far, proven elusive. Financial stability risks may have eased, reflecting improvements in the economic outlook and continuing accommodative policies. But those supportive policies — while necessary to restart the economy — have also masked serious, underlying financial vulnerabilities that need to be addressed as quickly as possible.
- Many advanced economies are "living dangerously" because the legacy of high debt burdens is weighing on economic activity and balance sheets, keeping risks to financial stability elevated.
- At the same time, many emerging market countries risk overheating and the build-up of