IMF: Bank risks must be managed

The era of interventionist central banking is stabilising the banking sector over the short term, but is creating risks for the stability of the banking system over the medium term which will have to managed carefully, according to the IMF.

Since the financial system imploded in 2008, central banks have been at the forefront of efforts to prevent an economic collapse.

Interest rates are at historically low levels and the US Federal Reserve, the Bank of England and Bank of Japan have flooded the markets with money through quantitative easing. The ECB introduced a €1 trillion long-term refinancing operation to inject capital into the region’s banks.