Banks around the world still haven’t recognised half of their losses according to the International Monetary Fund’s managing director Dominique Strauss-Kahn.
There could be $1.5 trillion in bad debt remaining on their balance sheets, and losses on these bad loans still threaten the solvency of many institutions.
Bloomberg: Banking systems “remain undercapitalized” in many advanced economies with “far from normal” financial conditions, Strauss-Kahn said in a speech to the conference. The IMF said in September that banks may have $1.5 trillion in toxic debt remaining on their books, which may hurt credit markets and stifle the global economic recovery.
“Probably a little more has been disclosed in the U.S. and a little less in Europe, but it’s almost half and half,” Strauss-Kahn said. “So, we still have a long way to go.”
And from his original, prepared text
IMF: …the financial sector is still in bad shape. It will continue to need more capital as asset quality deteriorates. In this environment, imposing tougher standards now could jeopardize the recovery. Do we want to force the patient to exercise before she can even get out of bed?
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