IMF calls for attention amid heightened financial sector uncertainty

International Monetary Fund (IMF) head Kristalina Georgieva urged on Sunday to “remain vigilant” in the face of “increased uncertainty” in the financial sector, comments that followed the recent turmoil with Western banks.

The bankruptcy of California state bank Silicon Valley Bank (SVB) on March 10 raised concerns about the resilience of the banking sector in the US and Europe.

The first European victim, Credit Suisse, was bought by compatriot UBS on Sunday for a fraction of its market value.

“Obviously, risks to financial stability have increased,” Kristalina Georgieva said this Sunday at the China Development Forum, an event hosted by the Chinese government in Beijing.

The acquisition of Credit Suisse by UBS, coordinated by the Swiss authorities, as well as recent central bank measures to improve access to liquidity, averted a panic but failed to ensure market stability.

“Politicians have taken decisive action in response to risks to financial stability,” Georgieva said in her speech.

“These measures have eased market tensions to some extent, but uncertainty is high, highlighting the need to remain vigilant.”

The bank’s shares continued to fall on European stock exchanges on Friday.

Recent statements by European Central Bank (ECB) President Christine Lagarde reaffirming the resilience of the banking system, as well as statements by French President Emmanuel Macron and German Chancellor Olaf Scholz to calm souls, have failed to calm souls.

US President Joe Biden said on Friday in Ottawa, Canada that “the banks are doing well” and that he sees nothing “about to explode.” However, he acknowledged that it would take “a little time for things to settle down.”