DHAKA: The International Monetary Fund (IMF) has warned that risks to financial stability are growing.

It warns about what it calls “medium-term” dangers in both emerging and developed economies, in its twice-yearly report.

It expresses particular concerns about Europe, Japan and China, reports the BBC.

On a more positive note, the fund does say that short-term risks have abated since its previous assessment of global financial stability in April.

Pressures on emerging markets have eased, the report says. Rising commodity prices (though they are still relatively low) have helped and so has the reduced uncertainty about China’s prospects in the near term.

The report says investors were taken by surprise by the result of the British referendum on the European Union, but the political shock was absorbed by markets. They passed what it calls “this severe stress test”.

But looking further ahead, the IMF sees growing risks. A key factor is bank profits.

The good news is that banks are in some respects stronger than they were before the financial crisis. They have more capital, a kind of financial buffer that enables them to survive losses.

Their liquidity has improved, which means they have more chance of coping if they suddenly have to find funds quickly.

But they are struggling to make money.

BDST: 11:36 HRS, OCT 06, 2016
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