Global banking systems may need recapitalisation, restructuring - IMF

[webfact]

Global banking systems may need recapitalisation, restructuring - IMF

By Pete Schroeder

 

FILE PHOTO: The International Monetary Fund (IMF) logo is seen outside the headquarters building in Washington, U.S., as IMF Managing Director Christine Lagarde meets with Argentine Treasury Minister Nicolas Dujovne September 4, 2018. REUTERS/Yuri Gripas

 

WASHINGTON (Reuters) - Some countries' banking systems might have to be recapitalised or even restructured if their economies are severely damaged by prolonged disruption from the coronavirus outbreak, officials at the International Monetary Fund said on Tuesday.

 

"Pressure on the banking system is growing and higher defaults on debt are imminent. And many now expect a shock to the financial sector similar in magnitude to the 2008 crisis," Tobias Adrian, the director of the IMF's monetary and capital markets department, and Aditya Narain, the deputy director of the department, wrote in a blog post on Tuesday.

 

While the IMF did not specify which country's banking systems are most vulnerable, the warning from the world's top multilateral rescue fund marks a striking departure in tone from other leading regulators and bank chief executives, particularly in the United States, who have said lenders are robust enough to withstand the unfolding economic crisis.

 

Rules introduced following the 2008 global financial crisis have added hundreds of billions of dollars of extra capital and liquidity to the global banking system, arming lenders with ample reserves to continue lending to consumers and to honour multi-billion dollar corporate credit lines, they have said.

 

But on Tuesday, the IMF hinted that in some regions those reserves may not be sufficient to withstand what looks increasingly to be a prolonged economic crisis, with governments in recent days warning that widescale lockdowns aimed at mitigating the spread of the virus may continue for months.

 

"It might get worse ... Under more severely strained circumstances, we will have to rethink our playbook substantially. Some banking systems might have to be recapitalised or even restructured," Adrian and Narain wrote, adding that the IMF is willing to assist under such circumstances.

 

They listed a number of measures regulators around the world should take to mitigate the adverse effects on banking systems, including suspending new rule-making, encouraging loan modifications, urging banks to use their liquidity reserves and engaging in more broadly constant and clear communication with the industry - measures many regulators in the United States and Europe are already taking.

 

As with the last financial crisis, global coordination among regulators and governments is also "imperative," they warned, echoing worries from some global banks that emergency measures to shore up banking systems in individual countries could erode global standards critical for their businesses.

 

"Preserving the integrity of the international framework will be crucial for the credibility and integrity of the global financial system," they wrote.

 

(Reporting by Pete Schroeder; additional reporting by Megan Davies; Editing by Michelle Price, Chizu Nomiyama and Paul Simao)

 

-- © Copyright Reuters 2020-04-01

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[exparte]

Thailand has said it will not be seeking loans from the IMF for its new 500 Bill Baht COVID-19 stimulus plan. It says they will find the money elsewhere. Currently THailand has 220 Bill USD in Foreign Exchange Reserves

[Dumbastheycome]

So in effect this is saying that if need be there will be manipulations of global finance ledgers in order to maintain the relative current status.  

[NCC1701A]

this is the really scary part of this movie. you might want to look away.

 

[smedly]

1 hour ago, NCC1701A said:

this is the really scary part of this movie. you might want to look away.

 

Trillions have been made already from this disaster - petty mainstream media doesn't reveal what a "short" is and who is making billions from it

 

It would be a real eye opener for the masses if they only knew 

 

Mainstream media only report on the markets in meltdown - they ignore the other side of the markets - shorting trillions and making trillions

[rupert the bear]

another cyprus card shuffle off the bottom of the pack coming.

[brain150]

Solutions will be:

1. Cashless currency

2. Currency reform

 

Nothing new under the sun ... look at Germany 1923 how this usually works out

[timendres]

6 hours ago, smedly said:

Trillions have been made already from this disaster - petty mainstream media doesn't reveal what a "short" is and who is making billions from it

 

It would be a real eye opener for the masses if they only knew 

 

Mainstream media only report on the markets in meltdown - they ignore the other side of the markets - shorting trillions and making trillions

There are two sides to every trade. No mystery there.

[timendres]

12 minutes ago, brain150 said:

Solutions will be:

1. Cashless currency

2. Currency reform

 

Nothing new under the sun ... look at Germany 1923 how this usually works out

Some predict the US will revalue gold from the current $42 USD per ounce to $10,000 USD per ounce in a move to reset $100T of debt. Hard to imagine the repercussions. 

[jmccarty]

Nobody knows what the world will look like in 30 days.  The plan is, to plan to be back in business in 30 days.  If need to delay, then plan to be in business in another 30 days.  One day at a time is too hard to see anything like progress - much. For certain, this thing can be tracked reasonably well, lets see if the curve can be flattened flat.  For another certainty, even the most negative need to make a living still, if not by working for income, then from handouts. The handouts now have a limit.

[Andrew65]

28 minutes ago, timendres said:

Some predict the US will revalue gold from the current $42 USD per ounce to $10,000 USD per ounce in a move to reset $100T of debt. Hard to imagine the repercussions. 

Gold's currently $1,594.60.

[Logosone]

7 hours ago, smedly said:

Trillions have been made already from this disaster - petty mainstream media doesn't reveal what a "short" is and who is making billions from it

 

It would be a real eye opener for the masses if they only knew 

 

Mainstream media only report on the markets in meltdown - they ignore the other side of the markets - shorting trillions and making trillions

No, they did:

 

Bets against Britain pay off as profits surge at Odey's hedge fund

 

Hedge fund tycoon Crispin Odey's wager against the pound has paid off as profits at the Boris Johnson donor's investment firm soar. 

 

Profits at Odey Asset Management rose 81pc to £16m for the year to April 2019, according to accounts seen by The Telegraph. Mr Odey is believed to have taken £3.8m from the profit pool, up significantly on last year.  

Mr Odey, known as one half of the City's "Posh and Becks", was among the hedge fund managers who cashed in on the downfall of Metro Bank early last year. He had the biggest short position in the bank in March, when £1.3bn was wiped from its market value. 

 

The Brexiteer also renewed his wager against the pound early last year, before taking a u-turn in spring when he decided to "start to buy it [sterling] back". 

 

https://www.telegraph.co.uk/business/2020/01/16/bets-against-britain-pay-profits-surge-odeys-hedge-fund/

 

[klauskunkel]

10 hours ago, webfact said:

Global banking systems may need recapitalisation

OK. You can start with my account.

[GreasyFingers]

So who, what, is going to recapitalize it? Is there a pool of money somewhere that we do not know about?

[wombat]

what do they do, fractionalize and borrow money from themselves to fund the re-capitalisation?
 

Edited April 1, 2020 by wombat

[lannarebirth]

What was the $4.25 Trillion Grant/Loan facility to corporations for, if not to meet their obligations to these banks?

[timendres]

1 hour ago, Andrew65 said:

Gold's currently $1,594.60.

That is the "spot" price. However, the US Constitution defines "constitutional money" as gold and silver with assigned values for an ounce of each metal. Originally those values were 1oz Gold = $20 and 1oz Silver = $1. The value of gold was reset (I believe by Nixon when he "closed the window", but maybe by FDR when he outlawed gold, I cannot remember which) to $42. So, at this moment, the USD has a $42 value for one ounce of physical gold. Now, that is a "US Dollar", not a "Federal Reserve Note", so this is why I mentioned "repercussions", because the US Dollar is a different thing than a Federal Reserve Note, and it is not at all clear to me how contracts and "entitlements" are to be handled with regards to a gold repricing. Maybe there is someone expert on TVF that can shed a more accurate light on this than I can at the moment.

[Vigilante]

So it starts.

SDRs to the rescue

Never let a good crisis go to waste.

 

[bristolboy]

2 hours ago, timendres said:

That is the "spot" price. However, the US Constitution defines "constitutional money" as gold and silver with assigned values for an ounce of each metal. Originally those values were 1oz Gold = $20 and 1oz Silver = $1. The value of gold was reset (I believe by Nixon when he "closed the window", but maybe by FDR when he outlawed gold, I cannot remember which) to $42. So, at this moment, the USD has a $42 value for one ounce of physical gold. Now, that is a "US Dollar", not a "Federal Reserve Note", so this is why I mentioned "repercussions", because the US Dollar is a different thing than a Federal Reserve Note, and it is not at all clear to me how contracts and "entitlements" are to be handled with regards to a gold repricing. Maybe there is someone expert on TVF that can shed a more accurate light on this than I can at the moment.

The USA is no longer on the gold standard. There are no more paper dollars redeemable for gold or silver. Functionally that was dead after FDR took office. Utterly defunct after some point in Nixon's terms of office.

[timendres]

2 hours ago, bristolboy said:

The USA is no longer on the gold standard. There are no more paper dollars redeemable for gold or silver. Functionally that was dead after FDR took office. Utterly defunct after some point in Nixon's terms of office.

That is correct. But just as the government took us off that standard, they could put us back on it.

[jobsworth]

Bitcoin to one million dollars by the end of the year like Mcafee says maybe?

 

[Vigilante]

5 hours ago, jobsworth said:

Bitcoin to one million dollars by the end of the year like Mcafee says maybe?

 

All 'paper' assets (and many tangibles) get hammered in a recession/depression.

Cryptos are no better

Bitcoin thrived in the last crisis because it was bought, mostly as a novelty, by finace-illiterate millenial

 

Personally, I wouldn't touch cryptos with a long stick

...but like I said above, if enough dumba$$es pour money int them, they will rise

McAfee is shilling for Bitcoin bc he has a large stash and until recently, I believe, he has a 'mining' operation

 

[thaibeachlovers]

12 hours ago, GreasyFingers said:

So who, what, is going to recapitalize it? Is there a pool of money somewhere that we do not know about?

Taxpayers.

Here we go again- it wasn't long ago they pulled the same trick on us.

 

Never let a crisis go to waste.