The sharply increased interest rates have clearly increased the risks to financial stability, said International Monetary Fund (IMF) top woman Kristalina Georgieva.

Authorities in Switzerland and the United States, among others, have intervened after the collapse of banks to prevent excessive chaos, but the events of recent weeks “underline the importance of vigilance”.

“We continue to closely monitor developments and explore the potential implications for the global economy and financial stability,” Georgieva said in a speech at the China Development Forum in Beijing.

In the speech, she also reiterated her warning that the fragmentation of the world into different political and economic blocs will slow global growth. For example, at the moment there is a trade conflict between the United States and China, especially in the field of high technology, and the war in Ukraine. They can thwart international cooperation for development aid or the fight against climate change.

Georgieva, on the other hand, was optimistic about China’s expected economic growth, which is likely to recover further this year from the severe Corona lockdowns that major cities faced last year. But she also called on the Chinese government to reform the domestic economy.

In her opinion, there should be less emphasis on investments in heavy industry, which is largely made up of state-owned companies. Instead, consumer spending should become an important pillar of economic growth. A better social safety net for unemployment and illness would help.

At the same time, she called on the Asian superpower to work more closely with the international community to help poor countries that are sighing under high debt. Of all countries, China is the world’s largest lender to other countries, increasingly acting as a provider of emergency credit to developing countries. But if those countries get into trouble, according to critics from the US, among others, China often delays a solution that strips away debt.

“Over the next few years, it is vital to continue to help the world’s most vulnerable countries. We can only tackle the world’s greatest challenge through cooperation, avoiding the pitfall of fragmentation,” Georgieva said.

About the author: Damien Karlström

The editor-in-chief worked for many years as a literary editor in Bern's leading publications. Over time, I decided to become the editor-in-chief. The main direction of materials is international relations and society.

Load More Related Articles
Load More In Politics

Leave a Reply

Your email address will not be published. Required fields are marked *

Check Also

Jerome Powell announces the key rate decision: it will stay for a while

In his explanation of the interest rate decision, Powell said that the Fed is now much clo…