28/05/2014
Christine Lagarde denounces sluggish banking reforms
P { margin-bottom: 0.08in; } Reforms of the banking sector, necessary after the financial crisis of 2007-2009, are too slow and impeded by lobbying groups, the managing director of the International Monetary Fund (IMF), Christine Lagarde, declared on 27 May, the news agency Reuters reports. Banks now have more capital than they had just before the financial crisis, while governments have had to bail out the sector, Lagarde points out. “The bad news is that progress remains too slow, and we are far from done,” Lagarde said at a press conference in London. Reforms of the banking sector are complex, and are impeded by “lively opposition from the sector” and a certain slackness that threatens to take hold in the process at this stage, the managing director of the IMF continues. In particular, “the ‘too-big-to-fail’ problem has still not been resolved,” she adds, referring to the currently widespread opinion that governments will always be forced to bail out banks which are of systemic importance, whose bankruptcy would provoke a crisis comparable to the one that followed the collapse of Lehman Brothers in 2008. The IMF claims that the implicit subsidy or increased financing costs associated with this situation represent about USD70bn in the United States and up to USD300bn in the euro zone. Mark Carney, chairman of the Financial Stability Board, says that he wants to eradicate the too-big-to-fail problem by Christmas, but he is facing difficulties in Europe and Asia.
