Supervisors of the most vulnerable banks in the United States have been "insufficiently assertive" and their actions failed to adequately address financial stability risks, the International Monetary Fund (IMF) said on Friday
WASHINGTON (Pakistan Point News / Sputnik - 27th May, 2023) Supervisors of the most vulnerable banks in the United States have been "insufficiently assertive" and their actions failed to adequately address financial stability risks, the International Monetary Fund (IMF) said on Friday.
"It has become clear that, despite correctly diagnosing the vulnerabilities in the system, the actions that were subsequently taken by supervisors neither prevented the most vulnerable banks from continuing to grow rapidly nor precipitated fundamental changes to these banks' operations," the IMF said in a press release.
The IMF pointed out in the release that important questions have been raised about the insufficiently assertive stance taken by bank supervisors but also of the effectiveness of the stress tests undertaken to identify the extent of bank vulnerabilities and the potential for systemic contagion.
In order to combat the identified systemic risks of smaller financial institutions, the IMF supports holding mid-size banks to the same standard as large banks, the release said.
The IMF also calls for subjecting non-international banks to annual stress testing in line with the so-called Basel framework, which sets the standards for capital adequacy and stress testing, the release added.
