Daily Management Review

IMF suggests creating a rainy-day fund for the euro area


03/26/2018


Managing Director of the International Monetary Fund (IMF) Christine Lagarde proposed to create a "rainy-day fund" for the euro area to help mitigate future economic downturns in the bloc countries, Reuters reports.



Adam Tinworth via flickr
Adam Tinworth via flickr
Speaking in Berlin, Lagarde welcomed the "steady and widespread rise" in the global economy.

At the same time, she pointed to the strong factors threatening growth, such as the growth of populism and protectionism.

In order for the Eurozone to prepare for the next economic downturn, the IMF head urged the bloc members to develop a modernized union of capital markets, an improved banking union and move towards greater fiscal integration.

Mrs. Lagarde proposed to create a "rainy-day fund", in which members of the Eurozone would annually make contributions, accumulating assets in good times. Later, during the economic downturn, they could use the money from this fund.

In emergency situations, countries can borrow funds and repay their loans through future contributions, she said.

The transfer of funds may depend on how much the countries adhere to EU fiscal rules. Lagarde also recommended that countries pay a premium in good times, depending on the payments they received in bad times.

As for the alliance of capital markets, the head of the IMF called for more regulation and improved oversight mechanisms to cope with the potential inflow of financial services companies to continental Europe after Brexit.

According to Eurostat, the GDP of 19 Eurozone countries in the IV quarter of 2017 increased by 0.6% compared to the previous quarter. The growth was fixed for the 19th quarter in a row.

As a result of 2017, the euro area's GDP increased by 2.3% in general. This is the maximum growth rate since 2007.

In February, the European Commission increased the forecast for GDP growth in the Eurozone for 2018 from 2.1% expected in November to 2.3%. The forecast for 2019 is increased from 1.9% to 2%.

"This is the result of a stronger cyclical momentum in Europe, where labor markets continue to improve, and economic sentiment is particularly high, and stronger than expected global economic growth and trade," the European Commission said.

"The downside risks associated with the uncertain outcome of the Brexit talks remain, as well as the risks associated with geopolitical tensions and a shift towards more protectionist policies," warned the EC.

source: reuters.com
 






Science & Technology

Apple to come up with AR glasses

WEF: Big data regulation becomes a problem

Israeli Firm Accused Of Spying By WhatsApp, Lawsuit Filed Against It

Google Used Quantum Computer To Solve Complex Problem

Mars Had Earth-like Salt Lakes

Study: AI is not as profitable as you might think

Porsche, Boeing set to develop flying electric car

Samsung to invest $ 11 billion in new generation displays

US is betting on Nokia and Ericsson to replace Huawei

UPS becomes first to receive full regulatory approval for UAV shipping in USA

World Politics

World & Politics

‘We Are Woefully Underprepared’ As Glaciers Meltdown Leaving Global Water Supply At Risk

US to reconsider medical data security laws

Vale hiding information about problems at Brazilian dams could result in death of 270 people

US Lawmakers Introduce Bill About Xinjiang Uygur Camps In China

European Council agrees to extend Brexit again

Pressure From China Forces Maserati To Dissociate From Film Awards Event In Taiwan

China to replace Hong Kong's Carrie Lam

Iran warns of new reduction in nuclear deal liabilities