World economy not out of the woods
Abstract
The world banking system
has been adjusting to the
post-crisis deleveraging in
the household and corporate
sectors. At the same time,
leverage in government has
shot up as governments have
intervened massively to rescue
financial systems and to boost
public spending in response to
recessionary conditions. As the
recent Greek crisis has vividly
demonstrated, a new threat
looms, namely, a rise in sovereign
risks and the prospect of default
on government debt. Where
do we stand in relation to the
crisis? Has the banking system
recovered and to what extent?
What new risks raise the prospect
of another recession? What risks
are emerging markets exposed
to? A discussion based on the
April 2010 edition of the Global
Financial Stability Report of the
International Monetary Fund
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