View more on these topics

Global financial crisis may cost nearly $1trillion

The International Monetary Fund predicts losses resulting from the global economic crisis could reach nearly $1trillion.

The IMF makes the prediction in its Global Financial Stability Report.

The document suggests what began as a liquidity crisis is now evolving into a much more serious and long term economic issue.

It puts aggregate losses related to the residential mortgage market and related securities at about $565bn.

It says losses in the commercial real estate and consumer and corporate credit markets bring that figure up to $945bn.

The report says: “It is now clear that the current turmoil is more than simply a liquidity event, reflecting deep-seated balance sheet fragilities and weak capital bases, which means its effects are likely to be broader, deeper, and more protracted.

“A key challenge is to ensure that large systemically important financial institutions continue to move quickly to repair their balance sheets, raising equity and medium-term funding, even if it is more costly to do so now, in order to boost confidence and avoid further undermining the credit channel.”

It suggests that government policies will be the first line of defense for containing the issue.

The report says the short term auctions being held by central banks are helping to restore liquidity but that policymakers will need to address the problem from a number of angles by reflecting further on the role monetary policy tools, such as interest rate cuts, may have to play in minimising the effects of the downturn.


Recommended

Agents lose faith in housing market

Estate agents’ confidence in the housing market plummeted last month, according to HotProperty.co.uk’s confidence index. This reveals a 22% fall in confidence among agents in March compared with February. Shawn Luetchens, managing director of the property portal, says the result is due to a seasonal slowdown plus negative media coverage.

Learn more about bridging finance

Specialist lender Tiuta is to host a bridging finance training seminar for brokers on April 9.It will explore the use of bridging loans as a funding option, the loan application process and issues surrounding compliance.Gary Booth, director at Tiuta, says: “Bridging loans are often used as a last resort so not enough time is spent […]

Tackling the housing crisis will take more than money

The latest housebuilding figures from the Department for Communities & Local Government confirm the worst fears of many within the property industry. We are failing to address the housing shortage in any meaningful way. Let’s look at the number of housing ‘starts’, new housing projects where work has begun. In England, work has been started […]

Newsletter

News and expert analysis straight to your inbox

Sign up