Weak Global Economy Tops Agenda at IMF-World Bank Gathering

By iMFdirect

Recent turbulence in financial markets and increased risks in the global economy mean that the 2011 Annual Meetings of the IMF and World Bank are taking place at a critical time for the global economy.

Economic leaders will come together to assess the state of the world economy and discuss the policy actions needed to deal with today’s global economic challenges. The IMF’s updated forecast for the world economy will be published September 20.

About 10,000 policymakers, private sector and civil society representatives, journalists, and academics are expected to attend the Annual Meetings, which are set to take place on September 23–24.

In an interview, Reza Moghadam, Director of the IMF’s Strategy, Policy, and Review Department, discusses the issues that are likely to receive most attention at the meetings.

…There is widespread concern that the global economic recovery is losing momentum … ministers and central bank governors will come to these meetings with that concern uppermost in their minds. The key for the Fund is to facilitate discussion of these issues, both in terms of the causes of the problems and the solutions…

…we will be putting on the table ideas on how to improve our surveillance further, how to make it more relevant, how to make it as interconnected as the world economy…

….Policymakers from 187 countries will be coming together … formulating and taking forward collective actions—actions by the entire membership—to impart momentum to the global economic recovery.

Read the full interview or watch the video.

4 Responses

  1. I agree. Case in point, Deutsche Bank. Stock is down from 47 Euros in July, to 24 Euros at opening this morning. Loss of over 50%, and their “bank financial strength” was dropped to “C+” by Moody’s on 11 August, 2011. Had that been the case with a US or UK bank, it would be on every EU headline. Since it is Germany, a disceet vail is drawn over it and it becomes the elephant on the sofa. Germany has yet to come clean with their highly unethical “balance sheet magic”, which is actually encouraged by Management. We have open contact with an insider who is waiting for the bank’s collapse on a daily basis. Why is this not headloine news? Because 30% of Deutsche bank belongs to the German Federal Govt, that’s why. They love foisting their crappy Monetary Policy on the periphery, but cannot follow it themselves.

    Point is, when the first German Bank goes down, the rest will follow, and that is why we maintain that the strongest and weakest EU states (Germany & Greece) should both be forced out of the EU, with immediate effect, in order for a new core to be established, specifically one that will follow the EU mandates, not like Germany who stoically defy the EU and ECB authority when it does not suit them. This is THE news in the EU right now, we on the market know it.

  2. One has to wonder at this stage–what is the point of these so-called tax-payers meetings? Nothing is ever done, The one thing that ever comes out of these meeting are more money for these over-paid FAT-CATS;

    • Start attending meetings and conferences. Network your concerns, and have them heard and discussed. There are alot of politics and policy behind the scenes most do not understand. Be proactive.

  3. Banks lend to clients adjusting the interest rates they charge, the amounts they lend, the duration of the loans, and the scrutiny they give the borrowers, to what they perceived is the risk of non-payment, something which obviously already includes the information provided by the credit rating agencies.

    But the regulators also allow the banks to hold much less equity when lending to those perceived as “not-risky” than when lending to the “risky”.

    That results in that banks can leverage their equity much more with the risk-adjusted interest rates when lending to the “not-risky” than what they can do when lending to the “risky”.

    That results in banks earning much more on their capital in “risk-adjusted” terms when lending to the “not-risky”,like the “solid” sovereigns and the triple-A rated, than when lending to the “risky” small businesses and entrepreneurs?

    And so again, for the umpteenth time, at these meetings, I will try to extract an answer, from bank regulators or from other experts in the International Monetary Fund and the World Bank, to the following questions:

    Do you believe these regulations are compatible with the banks providing an efficient capital allocation service for the society? Do you not think that they distort the market? What would be the real risk adjusted interest rate of the market for the “solid” sovereigns without this regulatory bias in their favor?

    Don´t you think that the above could have had something to do with creating the dangerous excessive exposure to what was ex-ante perceived as not “risky”, like some “good” sovereigns and some lousily rated triple-A rated securities, and which brought us the current crisis?

    Don´t you think that the above discriminates unfairly, inefficiently and equally dangerously against those perceived as “risky”, like the small businesses and entrepreneurs?

    Where is a systemic bank crisis more likely to occur, because of excessive lending to what is perceived as “not-risky” or because of excessive lending to what is perceived as “risky”? Are not regulators supposed to worry about the credit ratings being wrong, instead of betting our banks on these being right?

    Why, more than three years after the crisis exploded, is this issue not even being discussed, and the capital requirements based on ex-ante perceived-risk still a fundamental part of Basel III?

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