IMF expects turbulence

The International Monetary Fund anticipates a prolonged adjustment period before global markets recover from the financial turbulence triggered by the subprime mortgage market collapse.
In its biannual Global Financial Stability Report, released today by IMF’s Monetary and Capital Markets Department, the organization said that credit conditions may not normalize in the near future, and that the structured credit markets need to adjust their practices in order to initiate stability.
“This does not require as some have suggested, a new regulatory paradigm,” Jaime Caruana, IMF Counsellor and director of the Monetary and Capital Markets Department, said. “But we must be ready to reexamine some elements of the framework we have, and to enhance it where necessary.”
Among the IMF recommendations are that financial institutions increase their transparency, establish a wider risk perimeter and that rating agencies improve their methods.

Related Topics: Mortgage Backed Bonds