The International Monetary Fund today said that Brazil, China and Turkey are “notable examples” of emerging-market nations where conditions suggest a banking crisis could arise.
“Signs of nascent credit booms in some emerging G-20 economies — if not addressed by appropriate policy responses — may portend risks of eventual financial crises and hard landings for economic growth,” the IMF said in a report today, published after its spring meetings.
In Brazil, external financing conditions and credit growth are contributing to overheating, while Turkey faces “booming credit” and evidence of vulnerabilities. The IMF said China should raise interest rates and lessen its reliance on quantitative limits and reserve requirements when tightening policies.
The IMF also renewed its call for currencies in emerging economies to appreciate relative to advanced economies.
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