Strained banking system may re-intensify eco crisis: IMF

The "nascent signs" of economic recovery notwithstanding, the International Monetary Fund (IMF) today warned that there are significant risks of the crisis recurring, as long as global banking system remains strained.     

Boosted by unprecedented policy measures including massive stimulus packages from different countries, the global economy is seeing signs of tentative turnaround even as the revival is expected to be slow.     

"Systemic risks have been substantially reduced following unprecedented policy actions and nascent signs of improvement in the real economy," the multilateral lending agency said.     

It also asserted that the immediate outlook for the financial system has improved markedly in recent months.     

However, IMF noted that the "risk of re-intensification of the adverse feedback loop between the real and financial sectors remains significant as long as banks remain under strain and households and financial institutions need to reduce leverage".     

In its latest Global Financial Stability Report, the lender cautioned the global community against complacency and urged policy makers to promptly come up with a future regulatory framework to foster sustained economic growth.