Powered by MOMENTUM MEDIA
subscribe to our newsletter
IMF stagnation a 'real risk': Treasury

IMF stagnation a 'real risk': Treasury

There is a "real risk" that continued stagnation in reform of the International Monetary Fund (IMF) could lead to an even more severe financial crisis the next time around, according to a Treasury statement.

In its Economic Roundup report, released Wednesday, Treasury questioned whether the global financial safety net – the set of financial resources and institutional arrangements that provide a backstop during a financial or economic crisis – is at a tipping point to fragmentation.

“Unabated growth in regional and bilateral resources will create challenges for coordination of crisis resolution and prevention,” the report said.

“At worst, it risks a situation where assistance is provided to countries without addressing moral hazard issues, thereby increasing the likelihood, magnitude and severity of the next crisis,” it said.

“Unless international economic policymakers act decisively, we may well be approaching a tipping point beyond which the global financial safety net will fragment because of a combination of stasis at the IMF and increasing concentration of safety net resources that are unlinked with the Fund.”

The Australian government believes the G20 must work to avoid reaching this tipping point, ensuring that the various elements of the global financial safety net are complementary and work together to achieve a common set of objectives.

Treasury’s report concludes that the composition of resources, comprising both permanent and temporary, could be rebalanced towards additional permanent resources, ideally located at the IMF, and supplemented by maintaining resources in regional institutions which are structured to be temporary and as a complement to the IMF.

“This will support an appropriate balance in the institutional framework of the global financial safety net,” the report said.

IMF stagnation a 'real risk': Treasury
mortgagebusiness

Latest News

The proportion of income required to service a home loan decreased nationwide over the September quarter 2018, according to joint research f...

Delinquencies underlying Australia’s mortgage portfolio increased over the year to September 2018 off the back of out-of-cycle interest ra...

The financial services giant has announced the launch of a new website designed to serve as a “one-stop shop” for financial education. ...

FROM THE WEB
podcast

LATEST PODCAST: What the conclusion of the royal commission means for the mortgage sector

Is enough being done to ensure responsible lending?