IMF warns of collapse in banking sector

The International Monetary Fund (IMF) has warned that the world’s banking sector could widen with frustrating news for governments, which have found themselves lost between facing financial crises and a number of banks in the United States and Switzerland.

Fears are that this dilemma will spiral out of control and spill into other markets such as Europe, although many analysts and officials say that the situation is stable with protectionist plans and policies in place for the banking system.

Pierre-Olivier Gurinchas, chief economist at the Monetary Fund, said the International Donor Corporation remained concerned about recent disruptions in the banking sector, despite moves by U.S. and Swiss authorities to deal with its struggling banks.

“The story is far from over,” he added, noting that EU banks are not immune from problems as long as the conglomerate has not moved forward with completing the long-debated mechanisms for dealing with struggling banks.

Gurinshas noted that tightening monetary policy takes time to become effective until it begins to affect inflation.