In its biannual report on global financial stability, published on Tuesday in the framework of its Spring Meetings, the IMF has also warned that if this situation continues, the magnitude of the crisis could rise and worsen.
“This crisis presents a very serious threat to the stability of the global financial system. After the Covid-19 outbreak, financial conditions have tightened at an unprecedented rate, exposing some cracks in global financial markets,” said the institution. based in Washington.
“A prolonged period of dislocation in the financial markets could create problems for financial institutions, which, in turn, could lead to a lack of credit for non-financial lenders, further exacerbating the economic recession,” the agency has warned.
In this sense, the IMF has recommended a series of measures, which for the most part have already been adopted by the rulers and regulators of the main world economies.
The entity chaired by Kristalina Georgieva believes that banks should use the capital and liquidity buffers they have created in recent years to absorb losses and financing pressures. It has also recommended that the authorities provide fiscal support to lenders to repay their loans and finance their operations.
Regarding other actors, such as asset managers or markets, the IMF has urged that all existing liquidity tools be used or that instruments to suspend financial activity be put in place, such as so-called ‘circuit breakers ‘, which avoid stock volatility.
The IMF has also explained that the most affected in this crisis will be emerging economies and developing countries, since they are more dependent on oil prices, which have plummeted in recent weeks, and depend on foreign financing, which It has been significantly reduced due to investor risk aversion.
“Emerging market bond issuers are much more leveraged today than they were in 2008,” the IMF has warned, while explaining that countries have less political leeway to approve fiscal policies.
The Fund has put figures on Tuesday to the coronavirus crisis, warning that world GDP will contract 3% in 2020, in what will be the worst recession since the Great Depression of the 1930s.
“It is highly likely that this year the global economy will experience its worst recession since the Great Depression, surpassing that seen during the financial crisis of a decade ago,” said IMF chief economist Gita Gopinath at the presentation of the ‘Outlook’ report. World Economic ‘.