The IMF issued its latest Global Financial Stability Report at the Oct. 13 annual meeting of the IMF and World Bank, and even though it is written in bankerese it cannot conceal their alarm over a pandemic-triggered financial blowout. The report’s foreword, written by IMF Financial Counsellor Tobias Adrian, warns: “The COVID-19 pandemic has triggered a global economic crisis of unprecedented magnitude. The World Economic Outlook forecasts a sharp global economic contraction for 2020.” The report praises central banks for pumping nearly $7.5 trillion into the failing financial system, on top of $12 trillion in fiscal stimulus — most of which has also gone to the banks — but warns that this gigantic debt bubble could easily get out of control. “Corporate debt is rising, and it is estimated to be at record levels relative to gross domestic product in most countries.… Furthermore, sovereign debt is at historically high levels. This is a critical issue for many low-income countries and some emerging market economies, where a debt crisis might be inevitable without prompt and decisive policy action.”
In short, “Near-term global financial stability risks have been contained for now.… However, vulnerabilities are rising, intensifying financial stability concerns in some countries.”
