Christine Lagarde, managing director of the International Monetary Fund, urged policy makers to consider “bold” changes to financial regulations that she said are necessary to ensure world stability and growth.
The global recovery remains fragile after improving in recent months, with public and private debt levels in Europe too high and the U.S. held back by household debt, Lagarde said. She said regulatory changes that focus on raising capital levels, rather than cutting back lending, as well as those that reduce legacy assets, will help economic expansion, she said.
“To help achieve the objectives of growth and stability, we need a stronger and safer financial sector that puts societal interest ahead of its own financial gain,” Lagarde said at an IMF event before this week’s meetings in Washington. “We need a more stable financial system, one that serves businesses and households rather than destabilizes the functioning of the real economy.”
The IMF today raised its global growth forecast for the first time in more than a year, with the U.S. boosting the outlook while recent improvements remain “very fragile.”
“It’s fair to say that things are looking a bit better than they did even a few months ago,” Lagarde said. “We can see some signs of thaw -- welcome signs after the longest, hardest, winter in a generation.”
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