IMF: the crisis will cost $1400 bn

During the past weeks, markets experienced and are still experiencing what it could be called one of the toughest periods in the past decade. In fact, according to the IMF the crisis will cost $1400 bn, well above the figure of $945 estimated by the Fund earlier in April. Already in September losses amounted to $760 bn, out of which banks were responsible for $580 bn.     

"With financial markets worldwide facing growing turmoil, internationally coherent and decisive policy measures will be required to restore confidence in the global financial system" said the IMF in the Global Financial Stability Report. 

Finally, the IMF said that the worst affected economies were at the same time the most sophisticated ones. The explanation relies in the fact that the bigger and the more sophisticated a financial system is, the more money it can borrow, which represents at the same time an increase in the impact of the consequent credit crunch.

"Yet despite its predictions of a more protracted global economic slowdown, the IMF says that there is still the risk of inflation."