Do more to prevent financial crisis, says debt campaign

16 Oct 17

Stronger financial protections for developing countries and policies to prevent a potential financial crisis should be prioritised, campaigners have said.

Rather than the International Monetary Fund and World Bank trying to predict the next economic crisis, more should be done to prevent it, Eric LeCompte, executive director of the religious development group Jubilee USA, has warned.

At the IMF and World Bank annual meetings last week, finance ministers, central bank governors and other government leaders raised warnings of another financial crisis, despite predicted economic growth.

"We need global policies in place that prevent risky and predatory behaviour and we still need policies in place that can prevent financial‎ crisis. We need stronger financial protections for developing economies when disaster strikes,” said LeCompte, who has observed IMF and World Bank Meetings since 2010.

"While IMF staff are looking at better ways to predict crisis, we are not putting in place the actual tools to prevent the next financial crisis.”

IMF managing director Christine Lagarde said in a speech earlier this month that there are “threats on the horizon” for the world economy due to rising debt, China’s credit expansion and excessive risk-taking in financial markets.

Germany’s departing finance minister Wolfgang Schäuble also said the financial world is in danger of “encouraging new bubbles to form” as a result of money pumped into markets by central banks.

Jubilee USA said nearly 100 million people, mostly women and children, were pushed into poverty as a result of the last financial crisis.

The IMF has also warned that the global growth recovery may not last and is “incomplete” with medium-term risks “still tilted to the downside”. 

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