IMF urges countries to improve the adequacy of bank capital

Improving the adequacy of bank capital and the restructuring of a number of banks are essential to restore confidence in the banking system, according to a report on global stability, prepared by the IMF. "To restore market confidence and reduce excessive dependence on funding provided by the central bank will require significant further strengthening of bank balance sheets in the euro area. You must raise capital to avoid damaging the process of reducing leverage, and a number of mostly small banks to undergo restructuring and if necessary - rehabilitation, "- noted in the analytical summary of the report. The IMF believes that in the coming months the most pressing issue is financing for banks and sovereign entities, especially the most vulnerable countries in the eurozone. "Policy measures aimed at fiscal consolidation and strengthening of bank balance sheets in these countries should be supported by credible guarantees that multilateral support mechanisms are flexible enough and have sufficient means to contribute to an orderly reduction of leverage without creating more tension with the budget or bank financing. In other countries, funding for less problematic, but still cause for concern "- note the IMF experts. Authorities in countries where banking systems continue to suffer the consequences of the financial crisis should increase transparency and to recapitalize, restructure and, if necessary - and close weak lenders. "Measurement and reduction of systemic risk, liquidity should take priority place in the program decision makers. These risks have been one of the main features of the recent crisis and has not yet been overcome" - the authors of the report. IMF draws attention to the fact that a common feature of the crisis in many countries was excessive and improper distribution credit growth, which contributed to booms in housing markets. "In the U.S. case, where the housing market and in its financing, there are still problems, this good practice means that the state's involvement in the housing market should be more clearly defined and transparent, including the following to reduce the role of two major state-sponsored institutions (Freddie Mac and Fannie Mae). These problems must be solved in stages, taking into account the still weak housing market and economic growth. Countries interested in establishing a strong system of housing finance, it is recommended "back to basics" - to ensure reliable execution of loans and facilitate the use of simple and transparent mortgage contracts, "- convinced the authors of the study. Source: Bankir.Ru