IMF Chief Georgieva warns of increased financial stability risks following recent turmoil in banking sector

International Monetary Fund Chief Kristalina Georgieva warned on Sunday that risks to financial stability had increased and stressed the need for vigilance following the recent turmoil in the banking sector. Speaking at China Development Forum in Beijing, the IMF managing director said, she expected 2023 to be another challenging year, with global growth slowing to below 3.0 percent due to the conflict in Ukraine, monetary tightening and scarring from the pandemic.

She said uncertainties are exceptionally high, with the outlook for the global economy likely to remain weak over the medium term. Ms Georgieva said, at a time of higher debt levels, the rapid transition from a prolonged period of low-interest rates to much higher rates, necessary to fight inflation, inevitably generates stresses and vulnerabilities, as evidenced by recent developments in the banking sector in some advanced economies.

Her comments came after the financial sector was shaken by the collapse of Silicon Valley Bank and the enforced takeover of Swiss bank Credit Suisse by rival UBS, leading to fears of contagion.