Duncan Smith/Corbis
"We see that the global financial system is holding up fairly well overall, even in the face of the world's wars and a substantial increase in interest rates. However, there are still weak banks in the current setting. For instance, these banks make up 9% of total banking assets in the United States," she said during her speech at the Davos Economic Forum.
Gopinath continued, "The real estate industry, which is significant in both the US and Europe, is another area where the IMF sees risks."
The last year's banking crisis demonstrated that losses of faith in the banking system and the possibility of a systemic crisis can arise from a few medium-sized banks alone.
Despite this, banks in emerging economies—aside from China—have fared very well; their high levels of regulatory capital have enabled them to weather the storm. In China, this is not the case. Gopinath noted, "China has some issues to be concerned about, particularly with smaller banks."
source: weforum.org
Gopinath continued, "The real estate industry, which is significant in both the US and Europe, is another area where the IMF sees risks."
The last year's banking crisis demonstrated that losses of faith in the banking system and the possibility of a systemic crisis can arise from a few medium-sized banks alone.
Despite this, banks in emerging economies—aside from China—have fared very well; their high levels of regulatory capital have enabled them to weather the storm. In China, this is not the case. Gopinath noted, "China has some issues to be concerned about, particularly with smaller banks."
source: weforum.org
