The International Monetary Fund says that the world price of the debt is a matter of concern.
In a new report, the IMF noted that the government must use the current context of strong economic growth to strengthen the state of their finances.
The organization also said that risks to global financial stability have increased.
There is, however, also say that the banking sector has become more resilient since the global financial crisis.
The IMF is the assessment of the general economic outlook, published on Tuesday, has been pretty optimistic for the short term.
But it noted there are risks, some of which are outlined in two reports, one on the stability of the financial system and the other focusing specifically on the public finances around the world. Future slowdown
Governments, the IMF has said “decisive action is needed”. He argues that by improving their finances when economic performance is strong, governments have more scope to use tax cuts or increase public spending to combat a future slowdown.
In regard to now, it also means they are less likely to have difficulty borrowing the money they need, when the economy weakens.
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It is critical, carefully chosen language, the united states, where the President of Donald Trump’s administration is embarking on tax cuts at a time when the IMF judges that the economy is close to full employment.
Policy, the IMF said, “must be recalibrated to ensure that the debt / GDP ratio declines over the medium term”. That strongly implies a point of view that WE all need to go in the opposite direction to what it currently provides.
There is also a warning on the risks of global financial instability. This is in part, but not only, about the rise in public debt.
Rising inflation and central banks ‘ responses with the increase in interest rates could exacerbate the debt problems and could also hit the prices of financial assets. Chinese banks
There is a warning about China. The scale and the opaque nature of the financial system poses a risk to stability, the IMF said.
That said, the report also notes that Chinese banks have reduced their use of risky short-term debt, in response to a toughening of the regulations.
The report finds that the global banking system is stronger today than it was at the time of the crisis. But he added that reforms must continue.
An encouraging point is the IMF of crypto-assets – the likes of Bitcoin – not currently pose a risk to financial stability. But they could make if they become more widely used.
He says that the technology behind these assets has the potential to make the financial markets more effectively.