European banks need bigger capital cushions to stop them being a risk to the
global financial system and precipitating another crisis, the International Monetary
banks are “caught in a maelstrom of interlinked pressures” the IMF
low levels of capital make some German banks, as well as weak Italian,
Portuguese and Spanish savings banks, “vulnerable to further shocks”.
it said global financial stability had improved in the past half year.
findings came in the IMF’s Global Financial Stability Report.
structural weaknesses and vulnerabilities in the euro area still pose
significant downside risks if not addressed comprehensively,” it said.
IMF also warned of an impending funding challenge for banks and nations still
grappling to come to terms with sovereign debt problems.
US banks built up capital in 2009,
after regulators completed stress tests that revealed some large holes.
European banks still need to raise a “significant amount of capital”
to regain access to funding markets.
overall, banks globally face a $3.6tn (£2.2tn) “wall of maturing
debt” coming due in the next two years, with banks in the Irish Republic
and Germany facing particular pressures.
IMF also said that, among advanced economies during 2011, Japan and the US faced the largest public debt
the United States and Japan continue
to benefit from low current (borrowing) rates, both are very sensitive to a
potential rise in funding costs,” it said.