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 Post subject: Banks facing $3.6 trillion 'wall of maturing debt', IMF
PostPosted: Mon Apr 18, 2011 10:43 pm 
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Banks facing $3.6 trillion 'wall of maturing debt', IMF Global Financial Stability Report says -> http://www.telegraph.co.uk/finance/econ ... -says.html

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Many European banks need bigger capital cushions to restore market confidence and help reduce the risk of another financial crisis, according to the IMF's report, published on Wednesday.
Banks around the world are facing a $3.6 trillion "wall of maturing debt" coming due in the next two years, and the rollover requirements are most acute for Irish and German banks, the report said.
"These bank funding needs coincide with higher sovereign refinancing requirements, heightening competition for scarce funding resources," the IMF said.
However the IMF said Spain's efforts to control its budget deficit have increased investor confidence and make it unlikely the country will follow Portugal in calling for a bail-out.

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 Post subject: Re: Banks facing $3.6 trillion 'wall of maturing debt', IMF
PostPosted: Mon Apr 18, 2011 10:49 pm 
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Global Financial Stability Report Durable Financial Stability Getting There from Here -> http://www.imf.org/external/pubs/ft/gfs ... f/text.pdf

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Overall, despite the transfer of risks from the private to the public sector during the crisis, confidence in the banking systems of many advanced economies has not been restored and continues to interact adversely with the sovereign risks in the euro area. Analysis presented in this report suggests that in order to restore market confidence and reduce excessive reliance on central bank funding, considerable further strengthening of euro area bank balance sheets will be needed. This will require higher capital levels, if a detrimental process of deleveraging is to be avoided, and a set of mostly smaller banks will have to be restructured and, where necessary, resolved. In the United States, a lackluster housing market, legacy mortgage problems, and a backlog of foreclosures continue to put pressure on the banking system, limiting credit creation and a return to a fully functioning mortgage market.

Larger bank capital buffers and strengthened balance sheets will also be necessary as countries transition to a new and more demanding regulatory regime. Countries in which banking systems are still struggling should enhance transparency (including through more rigorous and realistic stress tests) and recapitalize, restructure, and (if necessary) close weak institutions. Without these longer-term financial sector reforms, short-term funding difficulties may escalate into another systemic liquidity event.
<snip>
A common feature of the crisis in many countries was excessive and misallocated credit growth, which helped fuel housing market booms. Chapter 3 examines the connections between the housing finance systems and financial stability, noting that the structure of some countries’ housing finance systems led to a deeper housing bust and financial instability. The chapter suggests a set of best practices for housing finance. For the United States, where the housing market and its financing are still problematic, these best practices imply that there should be better-defined and more transparent government participation in the housing market, including a diminished role of the two large government-sponsored entities (Freddie Mac and Fannie Mae). These goals will need to be pursued incrementally, while taking into account the still-weak housing market and economic recovery. Economies seeking to create a strong housing finance system are advised to “go back to basics”—ensuring safe loan origination and encouraging simple and transparent mortgage contracts.

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