Credit losses could approach $1 trillion: IMF
Reuters
Tue Apr 8, 2008
WASHINGTON (Reuters) - The International Monetary Fund said on Tuesday that turmoil in credit markets could spread with losses possibly approaching $1 trillion, and cautioned that risks to global economic growth had increased.
In its twice-yearly assessment of global financial markets, the IMF said there had been a "collective failure" to grasp the extent of leverage in the financial system and the risk that it could be unwound in a disorderly fashion. Conditions may get worse as the limping U.S. economy leads to more credit losses.
"The credit shock emanating from the U.S. subprime crisis is set to broaden amid a significant economic slowdown," Jaime Caruana, director of the IMF's monetary and capital markets department, said at a news conference.
"The deterioration in credit has moved up and across the credit spectrum to prime residential and commercial mortgage markets, and to corporate credit markets. As the credit cycle turns, default rates are likely to rise across the board."
The fund estimated that write-downs and losses could conceivably reach $945 billion, but stressed that its calculations reflected market conditions in March, and the situation had improved somewhat since then. Still, officials declined to comment on whether financial markets were overestimating potential losses.
(Continued here.)
Tue Apr 8, 2008
WASHINGTON (Reuters) - The International Monetary Fund said on Tuesday that turmoil in credit markets could spread with losses possibly approaching $1 trillion, and cautioned that risks to global economic growth had increased.
In its twice-yearly assessment of global financial markets, the IMF said there had been a "collective failure" to grasp the extent of leverage in the financial system and the risk that it could be unwound in a disorderly fashion. Conditions may get worse as the limping U.S. economy leads to more credit losses.
"The credit shock emanating from the U.S. subprime crisis is set to broaden amid a significant economic slowdown," Jaime Caruana, director of the IMF's monetary and capital markets department, said at a news conference.
"The deterioration in credit has moved up and across the credit spectrum to prime residential and commercial mortgage markets, and to corporate credit markets. As the credit cycle turns, default rates are likely to rise across the board."
The fund estimated that write-downs and losses could conceivably reach $945 billion, but stressed that its calculations reflected market conditions in March, and the situation had improved somewhat since then. Still, officials declined to comment on whether financial markets were overestimating potential losses.
(Continued here.)
Powered by Blogger
0 Comments:
Post a Comment
<< Home