Regulatory framework ‘only half-built’

The financial regulatory framework is only “half-built and not safe” and weak banks remain a drag on growth, according to the IMF managing director, Christine Lagarde.

In a speech to the Frankfurt Finance Summit, Ms Lagarde said that progress has been made in transforming the financial landscape since the crisis erupted in 2008.

“But it is mostly in the wiring and the plumbing — essential elements of a solid structure, but under the surface. Balance sheet repair needs to be tackled at the same time as regulatoryreform, in a mutually reinforcing manner. Finishing the business in both areas is necessary to reap the fruits of hard-won gains in regulatory reform and to restore the full functioning of the financial sector so that it can do its job of intermediating funds to borrowers and support growth.”