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IMF adds four European countries to risk list

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Staff writer ▼ | January 15, 2014
The International Monetary Fund (MF) added Denmark, Finland, Norway and Poland to its list of countries that must have regular check-ups of their financial sectors, under an effort to prevent a repeat of the global financial crisis.
International Monetary Fund
International Monetary FundThe International Monetary Fund (MF) added Denmark, Finland, Norway and Poland to its list of countries that must have regular check-ups of their financial sectors, under an effort to prevent a repeat of the global financial crisis.


The IMF in 2010 had identified 25 other countries where financial sector evaluations will be mandatory. These reviews had been voluntary prior to the 2008-2009 financial crisis, which showed how quickly financial problems in one country could spread to its neighbors and the rest of the world. More than half of the 29 financial sectors the IMF deems "systemically important" are located in Europe, reports EurActiv.

"The financial sectors of these jurisdictions are highly interconnected not just with each other but also with other major financial centers," the IMF said about the focus on European financial centers. This makes them central nodes in the global financial network and important for global systemic stability."

The Fund's new evaluations have been shaped by the prolonged sovereign debt crisis in the euro zone, which at times threatened to destroy the currency bloc. The IMF itself has lent billions of dollars to the euro zone's weakest members, including Greece, Portugal and Cyprus.

Under a new methodology, the IMF said it would review not only how exposed one country's banks are to another's, but also consider sovereign debt exposures and the links between a country and its banks.


 

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