IMF sees banks deleveraging by $2.6 trillion

A drastic contraction of European bank balance sheets during the next 18 months could jeopardise financial stability and economic growth in Europe and beyond, according to forecasts from the International Monetary Fund.

In its Global Financial Stability Report, published on Wednesday, the fund warned that European banks looked set to shrink their balance sheets by $2.6tn (Euro 2tn) over that period. Unless officials improved their policy response, the IMF said, European banks would dump almost 7 per cent of their assets by the end of next year ... READ MORE

Released by the Financial Times - 18 April 2012