Inadequate lending by banks can cause the corona crisis to turn out worse than necessary. Economists from the International Monetary Fund (IMF) warn against this.
Aid measures should, in their view, be aimed at preventing a potential crisis-exacerbating effect for banks.
Experts point out that banks suffered significant losses in the 2008 financial crisis. At the time, this was a substantial brake on the provision of credit to many companies, with the result that the economic downturn was intensified.
It is essential that this scenario is not repeated this time, IMF economists emphasize. Their impression is that the financial sector is in a better position worldwide than it was more than ten years ago.
For example, banks have considerably strengthened their buffers. Still, the resilience of banks is likely to be severely tested by the corona crisis.
Earlier in the day, the fund predicted that the global economy would face the worst recession since the Great Depression in the 1930s. As the virus pandemic continues, banks’ credit losses are likely to increase.
National governments and central banks have recently announced numerous support measures. These are partly aimed at keeping money flows at banks going.
IMF experts insist that this type of aid will remain very important shortly to enable a robust and sustainable economic recovery once the pandemic is under control.
International cooperation is also crucial in this respect, according to the IMF, which itself is also working on additional support measures.
