Global financial systems are stabilizing, but significant challenges and risks remain, according to the IMF’s semiannual report, released yesterday.
The latest IMF Global Financial Stability Report (GFSR) estimates that global losses arising from the crisis for 2007-10 have improved to $3.4 trillion –that’s about $600 billion lower than the last GFSR.
However, further deterioration in banks’ loans is to come –because over half of their writedowns are still to be recognized. The report says actual and potential writedowns through end-2010 could amount to as much as $1.5 trillion. So, it’s clear that banks are facing three main challenges: