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Global recovery at risk from banks` `wall of debt`, IMF warns
Date 14/04/2011 14:16  Author webmaster  Hits 1150  Language Global
14 APR 2011

The "most pressing" challenge facing the global recovery is funding banks and governments, according to the International Monetary Fund (IMF), which warned that a major hurdle was looming.

By Emma Rowley | The Telegraph

The world's banks face a $3.6 trillion (£2.2 trillion) "wall of maturing debt" in the next two years alone, but must compete against governments to secure new financing, the fund said.

"These bank funding needs coincide with higher sovereign refinancing requirements, heightening competition for scarce funding resources," the latest global financial stability report from the IMF warned.

Irish and German banks faced the most "acute" need to rollover their debt, with as much as half of all their outstanding debt due in the next two years, said the IMF, which saw Europe's banks as posing a particular threat to the financial system.

"Many institutions – particularly weaker European banks – are caught in a maelstrom of inter-linked pressures that are intensifying risks for the system as a whole," it said.

With a number of European banks – "nearly all" of those in Greece, Ireland and Portugal, as well as some in Spain and Germany – now priced out on of the wholesale funding markets, there is a risk that negative news could see more institutions join them, said the IMF.

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