cheka.
15th April 2015, 10:37 PM
http://uk.reuters.com/article/2015/04/15/us-imf-g20-financial-idUKKBN0N61HM20150415
(Reuters) - Rising U.S. interest rates will expose gaps in liquidity that could make markets prone to deeper and wider shocks, the International Monetary Fund said in a report on Wednesday.
The IMF's twice-yearly Global Financial Stability Report also warned that financial risks have increased in the last six months and shifted more to emerging markets and the "shadow" banking sector, or non-bank financial intermediaries.
The warnings from the Washington-based institution come as the U.S. Federal Reserve is expected to raise interest rates later this year for the first time in nine years, prompting fears of market gyrations and capital outflows from developing countries.
The IMF said the Fed's pullback from monetary stimulus is likely to expose deeper factors that have already sapped market liquidity, including the rise of high-frequency trading and increased regulation.
"Markets could be increasingly susceptible to episodes in which liquidity suddenly vanishes and volatility spikes," the IMF said in the report.
It pointed in particular to two recent examples of market jolts that could be a harbinger of more to come, echoing warnings from the Bank of England.
(Reuters) - Rising U.S. interest rates will expose gaps in liquidity that could make markets prone to deeper and wider shocks, the International Monetary Fund said in a report on Wednesday.
The IMF's twice-yearly Global Financial Stability Report also warned that financial risks have increased in the last six months and shifted more to emerging markets and the "shadow" banking sector, or non-bank financial intermediaries.
The warnings from the Washington-based institution come as the U.S. Federal Reserve is expected to raise interest rates later this year for the first time in nine years, prompting fears of market gyrations and capital outflows from developing countries.
The IMF said the Fed's pullback from monetary stimulus is likely to expose deeper factors that have already sapped market liquidity, including the rise of high-frequency trading and increased regulation.
"Markets could be increasingly susceptible to episodes in which liquidity suddenly vanishes and volatility spikes," the IMF said in the report.
It pointed in particular to two recent examples of market jolts that could be a harbinger of more to come, echoing warnings from the Bank of England.