“This crisis was not a black swan”
News Source: CASE -- Center for Social and Economic Research, Warsaw, Poland
Fernando Montes-Negret of the International Montetary Fund (IMF) gave his analysis on the causes of and cures for the current world economic crisis at a Center for Social and Economic Research (CASE) seminar.
His appearance at the March 7 event in Warsaw can be viewed on this video.
CASE Policy Research Seminar: “Reflections on the financial crisis” by Fernando Montes-Negret from CASE on Vimeo.
Montes-Negret, Senior Financial Sector Expert at IMF, said that banks need good governance and supervision to prevent and detect crises in advance. The current crisis was predictable, he said, adding that “the form that it took was much more than someone could have expected.”
In his presentation, “The 2007-2010 Financial Crises (plural): Symptoms, Causes & Remedies,” Montes-Negret, delved into the causes of the crises and addressed the issue of systemic risk drivers: leverage, liquidity, linkages and losses. In order to reduce the banks’ leverage, Mr. Montes-Negret looked at two options; increasing the banks’ capital and reducing the banks’ assets. Whereas more capital does not decrease the chances of a crisis, it might reduce costs, therefore, “less leverage with more capital must be part of the solution,” he said.
According to Montes-Negret, substantial challenges are needed if the global financial system is to be restored. He said that banks have to adjust, “there will be more consolidation and there will be less need of branches,” and that on-site supervision has to be strengthened.
A copy of his presentation can be downloaded below:
plik--32926653 (1).pdf (5.14 MB)
