Sustainable credit
Slowly on the road to recovery, a key concern about the future remains: how best to ensure an economically beneficial supply of credit through a sustainable level of leverage? This World Economic Forum project will look at supply and demand of credit and try to answer the key questions.
In the aftermath of the global recovery attention is focusing on how to ensure greater stability amid concern about the susceptibility of some banks to ongoing turmoil and after-shocks in the financial markets.
As banks repair their balance sheets and deal with huge writedowns concerns remain that with markets still reluctant to support leverage the severely diminished flow of credit may undermine a global recovery.
It is accepted that the credit recovery will be slow and that policy moves by lawmakers may be required to address credit constraints. The International Monetary Fund has warned during 2010 of the continued risks to global recovery and said that concerns about European government bonds could prompt another banking crisis.
"Financial sector risks are not confined to European banks," the IMF said. "The recent turmoil has again demonstrated the susceptibility of banks worldwide to runs on wholesale funding," it added.
As banks repair their balance sheets and deal with huge writedowns concerns remain that with markets still reluctant to support leverage the severely diminished flow of credit may undermine a global recovery.
It is accepted that the credit recovery will be slow and that policy moves by lawmakers may be required to address credit constraints. The International Monetary Fund has warned during 2010 of the continued risks to global recovery and said that concerns about European government bonds could prompt another banking crisis.
"Financial sector risks are not confined to European banks," the IMF said. "The recent turmoil has again demonstrated the susceptibility of banks worldwide to runs on wholesale funding," it added.
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